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Novo Nordisk (NVO) Falls as Q2 Earnings and Sales Miss, View Up
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Novo Nordisk A/S (NVO - Free Report) reported second-quarter 2024 earnings of 65 cents per American Depositary Receipt (ADR), which missed the Zacks Consensus Estimate of 71 cents. The company had reported earnings of 63 cents per ADR in the year-ago quarter.
Revenues of $9.82 billion increased 25% in both Danish kroner (DKK) and at constant exchange rate (CER) in the reported quarter. However, total revenues missed the Zacks Consensus Estimate of $9.91 billion. The year-over-year increase in revenues was driven by higher Diabetes and Obesity Care sales as GLP-1 product sales increased year over year, partially offset by a slight fall in Rare disease sales.
Novo Nordisk’s shares are declining due to lower-than-expected results for the second quarter of 2024. Year to date, shares of NVO have climbed 25.8% compared with the industry’s 15.8% growth.
Image Source: Zacks Investment Research
All growth rates mentioned below are on a year-over-year basis and at CER.
Quarter in Detail
Novo Nordisk operates under two segments: Diabetes and Obesity Care and Rare disease.
The Diabetes and Obesity Care segment reported sales of DKK 64.1 billion in second-quarter 2024, which grew 27%. In Diabetes Care, fast-acting insulin Fiasp’s revenues were up 26%. NovoRapid revenues increased 7% and Human insulin revenues declined 22%. Premix insulin (Ryzodeg and NovoMix) revenues were flat. Sales of long-acting insulins (Tresiba, Xultophy, Levemir and Awiqli) jumped 42% in the reported quarter.
Ozempic, which has witnessed a strong launch and solid uptake so far, recorded sales of DKK 28.9 billion for the quarter, up 30%. Rybelsus, too, witnessed a strong uptake and recorded sales of DKK 5.9 billion for the quarter, up 49%. Additionally, Victoza sales of DKK 2.2 billion increased 21% during the reported quarter.
Obesity Care (Saxenda and Wegovy) sales were up 34% to DKK 13.9 billion. Wegovy sales continued to soar, recording DKK 11.7 billion in sales, representing a surge of 53%, driven by robust demands and Novo Nordisk’s efforts to meet the same.
Sales in the Rare disease segment were down 3% to DKK 4 billion in the second quarter of 2024. Sales of rare blood disorder products were DKK 2.9 billion, up 1%. Sales of hemophilia A products decreased 11%. Hemophilia B products’ sales increased 45%. Sales of NovoSeven were flat at DKK 1.8 billion.
Sales and distribution costs climbed 4% both in DKK and at CER in the reported quarter to DKK 14.9 billion. This increase was due to promotional activities related to Wegovy and Rybelsus in North America and International Operations, respectively. In International Operations, costs related to Obesity care market development activities also contributed to the increase.
Research and development (R&D) costs were up 127% and 126% in DKK and at CER, respectively, to DKK 16.2 billion. The massive surge in R&D costs was driven by increased clinical activity for late-stage studies and research activities, compared with the year-ago quarter. The recognition of the impairment loss related to the ocedurenone of DKK 5.7 billion and other impairments of intangible assets also fueled the soaring of such expenses.
Administrative costs increased 8% in both DKK and at CER to DKK 1.2 billion.
2024 Outlook Updated
Novo Nordisk now expects its sales to grow in the band of 22-28% compared with the previous guidance of 19-27%. The company also expects operating profit to grow in the band of 20-28% compared with the previous guidance of 22-30%.
The updated sales outlook at CER reflects higher full-year expectations for both operating units. Overall, the guidance indicates steady sales growth in North America and International Operations, primarily driven by the volume growth of GLP-1-based Diabetes and Obesity care products. Per NVO, the impact of continued pricing pressure within Diabetes and Obesity care is also captured in the updated guidance.
Novo Nordisk has high expectations from this segment, especially from Ozempic in the diabetes market and Wegovy in the obesity care market. The company continues to remain concerned about periodic supply constraints and drug shortages across several products and geographies.
However, the company has been heavily investing in ramping up its internal and external production capacity to tackle both the short and long-term demands of its GLP-1 products.
In the United States, NVO started gradually increasing the supply of the lower dose strengths of Wegovy to meet demand since January 2024. Furthermore, the sales growth indicated in the updated guidance accounts for a gradual roll-out of Wegovy with capped volumes in International Operations.
Novo Nordisk’s earnings and revenues missed estimates in the second quarter of 2024 as the Diabetes and Obesity care sales failed to meet investor expectations. However, the key drugs in this segment have recorded year-over-year increases in revenues. Ozempic and Rybelsus have experienced great traction in the market since launch and are expected to drive growth in the upcoming quarters as well. Wegovy, too, has been witnessing robust uptake so far, contributing significantly to the top line.
NVO’s focused efforts to increase the supply capacity for Wegovy in the United States, as well as other international markets, are highly commendable. By gradually meeting the robust demand for the blockbuster obesity care drug, the company will be able to maintain its market share dominance. The increasing demand trend for the drug is encouraging and expected to fuel higher revenue incomes in the upcoming quarters.
Zacks Rank & Stocks to Consider
Novo Nordisk currently carries a Zacks Rank #3 (Hold).
In the past 60 days, the Zacks Consensus Estimate for Annovis’ 2024 loss per share has remained constant at $2.46. During the same period, the consensus estimate for 2025 loss per share has narrowed from $1.95 to $1.91. Year to date, shares of ANVS have plunged 55.3%.
ANVS beat estimates in three of the trailing four quarters and missed once, delivering an average negative surprise of 1.39%.
In the past 60 days, the Zacks Consensus Estimate for Anixa Biosciences’ 2024 loss per share has narrowed from 44 cents to 43 cents. During the same time frame, the estimate for Anixa Biosciences’ 2025 loss per share has remained constant at 45 cents. Year to date, shares of ANIX have lost 17.5%.
ANIX beat estimates in three of the trailing four quarters and missed the mark once, delivering an average earnings surprise of 2.27%.
In the past 60 days, estimates for Akero Therapeutics’ 2024 loss per share have narrowed from $3.87 to $3.82. During the same period, loss per share estimates for 2025 have remained constant at $4.29. Year to date, shares of AKRO have gained 5.7%.
Akero’s earnings beat estimates in one of the trailing four quarters, missed twice and matched once, delivering an average negative surprise of 5.10%.
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Novo Nordisk (NVO) Falls as Q2 Earnings and Sales Miss, View Up
Novo Nordisk A/S (NVO - Free Report) reported second-quarter 2024 earnings of 65 cents per American Depositary Receipt (ADR), which missed the Zacks Consensus Estimate of 71 cents. The company had reported earnings of 63 cents per ADR in the year-ago quarter.
Revenues of $9.82 billion increased 25% in both Danish kroner (DKK) and at constant exchange rate (CER) in the reported quarter. However, total revenues missed the Zacks Consensus Estimate of $9.91 billion. The year-over-year increase in revenues was driven by higher Diabetes and Obesity Care sales as GLP-1 product sales increased year over year, partially offset by a slight fall in Rare disease sales.
Novo Nordisk’s shares are declining due to lower-than-expected results for the second quarter of 2024. Year to date, shares of NVO have climbed 25.8% compared with the industry’s 15.8% growth.
Image Source: Zacks Investment Research
All growth rates mentioned below are on a year-over-year basis and at CER.
Quarter in Detail
Novo Nordisk operates under two segments: Diabetes and Obesity Care and Rare disease.
The Diabetes and Obesity Care segment reported sales of DKK 64.1 billion in second-quarter 2024, which grew 27%. In Diabetes Care, fast-acting insulin Fiasp’s revenues were up 26%. NovoRapid revenues increased 7% and Human insulin revenues declined 22%. Premix insulin (Ryzodeg and NovoMix) revenues were flat. Sales of long-acting insulins (Tresiba, Xultophy, Levemir and Awiqli) jumped 42% in the reported quarter.
Ozempic, which has witnessed a strong launch and solid uptake so far, recorded sales of DKK 28.9 billion for the quarter, up 30%. Rybelsus, too, witnessed a strong uptake and recorded sales of DKK 5.9 billion for the quarter, up 49%. Additionally, Victoza sales of DKK 2.2 billion increased 21% during the reported quarter.
Obesity Care (Saxenda and Wegovy) sales were up 34% to DKK 13.9 billion. Wegovy sales continued to soar, recording DKK 11.7 billion in sales, representing a surge of 53%, driven by robust demands and Novo Nordisk’s efforts to meet the same.
Sales in the Rare disease segment were down 3% to DKK 4 billion in the second quarter of 2024. Sales of rare blood disorder products were DKK 2.9 billion, up 1%. Sales of hemophilia A products decreased 11%. Hemophilia B products’ sales increased 45%. Sales of NovoSeven were flat at DKK 1.8 billion.
Sales and distribution costs climbed 4% both in DKK and at CER in the reported quarter to DKK 14.9 billion. This increase was due to promotional activities related to Wegovy and Rybelsus in North America and International Operations, respectively. In International Operations, costs related to Obesity care market development activities also contributed to the increase.
Research and development (R&D) costs were up 127% and 126% in DKK and at CER, respectively, to DKK 16.2 billion. The massive surge in R&D costs was driven by increased clinical activity for late-stage studies and research activities, compared with the year-ago quarter. The recognition of the impairment loss related to the ocedurenone of DKK 5.7 billion and other impairments of intangible assets also fueled the soaring of such expenses.
Administrative costs increased 8% in both DKK and at CER to DKK 1.2 billion.
2024 Outlook Updated
Novo Nordisk now expects its sales to grow in the band of 22-28% compared with the previous guidance of 19-27%. The company also expects operating profit to grow in the band of 20-28% compared with the previous guidance of 22-30%.
The updated sales outlook at CER reflects higher full-year expectations for both operating units. Overall, the guidance indicates steady sales growth in North America and International Operations, primarily driven by the volume growth of GLP-1-based Diabetes and Obesity care products. Per NVO, the impact of continued pricing pressure within Diabetes and Obesity care is also captured in the updated guidance.
Novo Nordisk has high expectations from this segment, especially from Ozempic in the diabetes market and Wegovy in the obesity care market. The company continues to remain concerned about periodic supply constraints and drug shortages across several products and geographies.
However, the company has been heavily investing in ramping up its internal and external production capacity to tackle both the short and long-term demands of its GLP-1 products.
In the United States, NVO started gradually increasing the supply of the lower dose strengths of Wegovy to meet demand since January 2024. Furthermore, the sales growth indicated in the updated guidance accounts for a gradual roll-out of Wegovy with capped volumes in International Operations.
Novo Nordisk A/S Price and Consensus
Novo Nordisk A/S price-consensus-chart | Novo Nordisk A/S Quote
Our Take
Novo Nordisk’s earnings and revenues missed estimates in the second quarter of 2024 as the Diabetes and Obesity care sales failed to meet investor expectations. However, the key drugs in this segment have recorded year-over-year increases in revenues. Ozempic and Rybelsus have experienced great traction in the market since launch and are expected to drive growth in the upcoming quarters as well. Wegovy, too, has been witnessing robust uptake so far, contributing significantly to the top line.
NVO’s focused efforts to increase the supply capacity for Wegovy in the United States, as well as other international markets, are highly commendable. By gradually meeting the robust demand for the blockbuster obesity care drug, the company will be able to maintain its market share dominance. The increasing demand trend for the drug is encouraging and expected to fuel higher revenue incomes in the upcoming quarters.
Zacks Rank & Stocks to Consider
Novo Nordisk currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the biotech sector are Annovis Bio (ANVS - Free Report) , Anixa Biosciences (ANIX - Free Report) and Akero Therapeutics (AKRO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, the Zacks Consensus Estimate for Annovis’ 2024 loss per share has remained constant at $2.46. During the same period, the consensus estimate for 2025 loss per share has narrowed from $1.95 to $1.91. Year to date, shares of ANVS have plunged 55.3%.
ANVS beat estimates in three of the trailing four quarters and missed once, delivering an average negative surprise of 1.39%.
In the past 60 days, the Zacks Consensus Estimate for Anixa Biosciences’ 2024 loss per share has narrowed from 44 cents to 43 cents. During the same time frame, the estimate for Anixa Biosciences’ 2025 loss per share has remained constant at 45 cents. Year to date, shares of ANIX have lost 17.5%.
ANIX beat estimates in three of the trailing four quarters and missed the mark once, delivering an average earnings surprise of 2.27%.
In the past 60 days, estimates for Akero Therapeutics’ 2024 loss per share have narrowed from $3.87 to $3.82. During the same period, loss per share estimates for 2025 have remained constant at $4.29. Year to date, shares of AKRO have gained 5.7%.
Akero’s earnings beat estimates in one of the trailing four quarters, missed twice and matched once, delivering an average negative surprise of 5.10%.