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Strategic Makeover Makes Nordion a Narrow-Moat Leader

Concerns surrounding the NRU reactor have overshadowed the attractiveness of the firm's other segments.


In 2010, Nordion (NDZ) shed two business units and refocused its efforts on its three radiation-related segments. Now that it has narrowed its focus to its three strongest businesses, we believe the firm's many competitive advantages in the radiation industry warrant a narrow economic moat. This overall narrow moat is based on a combination of the wide-moat sterilization business, narrow-moat isotope business, and no-moat targeted therapies business.

Because of the nature of the radiation business, a number of key competitive advantages are present throughout Nordion's three business units. The small number of nuclear reactors limits global supply of radiation products. Given safety and security concerns, very few governments are eager to develop new reactors. Nordion's access to existing reactors, through strong relationships and exclusive long-term contracts, is a significant advantage. Also, governments operating nuclear reactors want to be sure that they are dealing with trustworthy customers who will safely and securely use and transport the reactor's products. Nordion's long industry record is another significant competitive advantage.

David Krempa does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.