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Novo Nordisk: Q1 Earnings Results Show Bullish Thesis Continuing

May 07, 2018 10:12 AM ETNovo Nordisk A/S (NVO)2 Comments


  • Novo Nordisk reported solid Y-O-Y growth, marred only by currency fluctuations.
  • These currency fluctuations caused the company's headline numbers to look much weaker than they actually were.
  • Saxenda, the company's weight loss product exhibited 69% growth, fulfilling my earlier predictions that this could prove to be a growth engine for Novo Nordisk.
  • The company's diabetes care products all showed significant growth and its long-lasting basal insulin captured a growing share of the US market.
  • The company remains an excellent way to play both the global diabetes epidemic and the pharmaceutical industry in general.

On Wednesday, May 2, 2018, Danish diabetes-focused pharmaceutical giant Novo Nordisk A/S (NVO) announced its first quarter 2018 earnings results. The market as a whole seemed pleased with these results as the stock surged 5% in pre-market trading. This does make some sense as these earnings were quite good, particularly from the diabetes care division that accounts for the majority of the company's business. Overall, investors in the business are likely to be quite pleased with the company's performance.

As my long-time readers are likely well aware, it is my usual practice to share the highlights from a company's earnings report before delving into an analysis of its results. This is because these highlights serve as a background for the remainder of the article and provide a framework for the resultant analysis. Therefore, here are the highlights from Novo Nordisk's first quarter 2018 earnings results:

  • Novo Nordisk reported total sales of DKK 26.9 billion in the first quarter of 2018. This represents a 5% decrease compared to the prior year quarter.
  • The company had an operating profit of DKK 12.4 billion in the most recent quarter, representing an 8% decrease compared to the year-ago quarter.
  • Novo Nordisk launched Ozempic (subcutaneous semaglutide) in the USA in February 2018. The drug was also approved for the treatment of type-2 diabetes in both the European Union and Japan during the quarter.
  • The company completed its phase 3a trial of oral semaglutide for the treatment of type-2 diabetes in February. The trial was successful.
  • Novo Nordisk reported a net profit of DKK 10.8 billion in the quarter. This represents a 6% increase year-over-year.

The first thing that anyone reading these results will likely notice is that both revenue and operating profit declined sharply year-over-year. However, this is not nearly as negative as it might seem

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