By Dominic Chopping
Novo Nordisk is scheduled to report results for the second quarter on Thursday. Here’s what to watch:
NET PROFIT FORECAST: Net profit in the quarter is seen rising 55% to 20.63 billion Danish kroner ($3.03 billion), according to a FactSet poll of analysts.
SALES FORECAST: A FactSet poll sees second-quarter sales rising to DKK55.47 billion from DKK41.27 billion last year.
WHAT TO WATCH:
–GLP-1 DRUGS: Sydbank senior analyst Soren Lontoft Hansen said in a note that he expects Novo Nordisk’s glucagon-like peptide-1 drugs, or GLP-1, for treating type 2 diabetes and obesity to have continued their strong growth in the quarter, modeling overall sales growth of 43% on the year for GLP-1 diabetes treatments to DKK27.45 billion. Temporary production challenges in several markets as a result of high demand may dampen the growth picture somewhat, he says. The Danish pharmaceutical company’s Ozempic diabetes drug is also being used to treat obesity “off-label” and Sydbank expects Ozempic sales grew 44% on year. Prescription data from the U.S. shows continued extremely high demand for obesity drug Wegovy, but Novo Nordisk’s previous decision to reduce the supply of low doses in the U.S. will eat into quarterly growth, he adds. Hansen models Wegovy sales of DKK5.56 billion. Both Ozempic and Wegovy are based on the same active ingredient – semaglutide. Novo Nordisk on Tuesday said a trial of Wegovy showed that it not only helped people lose weight but also reduced their risk of suffering heart attacks, strokes and cardiovascular deaths by 20%.
–MARGINS: Sydbank expects the gross margin to be helped by the marked increase in sales and product-mix effects, while lower net prices in the U.S. and currency effects pull in the opposite direction. The bank models a gross margin of 84.0% from 85.3% last year. “We see rising capacity costs in the form of higher costs for research and development as well as sales and distribution in the quarter, which reflects the higher level of activity. However, in our estimation, the increase in capacity costs will be less than the top line growth.”
–GUIDANCE: The company expects 2023 sales growth of 24% to 30% on year and operating profit growth of 28% to 34% in constant currencies. Reported growth in sales is seen around six percentage points below constant currencies, while reported operating profit growth is seen around nine percentage points lower. Sydbank thinks that production challenges for the GLP-1 portfolio within diabetes and obesity treatment may put a damper on an upward adjustment to guidance. “Novo Nordisk’s production capacity will therefore be on the focus list in connection with the accounts.”
Write to Dominic Chopping at [email protected]
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