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Research Tree provides access to ongoing research coverage, media content and regulatory news on NOVO NORDISK A S-B. We currently have 9 research reports from 1 professional analysts.
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NOVO NORDISK A S-B
NOVO NORDISK A S-B
2017 outlook ruins the sentiment
03 Feb 17
Novo Nordisk’s Q4 results were in line with our expectations, but the disappointing guidance for 2017 sent the shares into jeopardy – plunged by more than 7% post the results announcement. NB all sales numbers are in local currencies (LC), unless specified otherwise. Q4 sales barely managed to grow by 3% in LC and 2% in DKK to DKK29.5bn, characterised by increasing competition and pricing pressure in the basal insulin market. Although the new generation insulin – Tresiba, Xultophy and Ryzodeg – grew strongly, generating DKK1.7bn (up 269% vs 203% in Q3) together, the modern insulins – Levemir (-17% vs Q3: -4%, Q2: -1%, Q1: 9%), NovoRapid (-2% vs Q3: -3%, Q2:-3%, Q1: -1%), and NovoMix (-5% vs Q3: -3%, Q2: -1%, Q1: 1%) reflected a grim picture. Victoza sales were up 10% to DKK5.4bn (vs DKK5.1bn in Q3) during the quarter. Total diabetes business grew by 5% (vs Q3: 5%, Q2: 7%, Q1: 7%) to DKK23.8bn, while the Biopharma business declined by 2% (vs Q3: +1%, Q2: 1%, Q1: 15%) to DKK5.7bn. Geographically, the growth was entirely driven by international markets and China, while the US and Europe (accounting for 70% of the group sales) yielded almost nothing. For the full year, the sales growth of 6% (4% in DKK) to DKK111.8bn was in line with management guidance of 5-6%. The operating profit for the quarter grew by 1% in DKK (vs 4% in Q3) to DKK11.2bn, but the margin declined from 38.5% in Q4 15 to 37.9% in this quarter. The full-year operating profit, which declined by 2% in DKK to DKK48.4bn, was helped by lower hedging losses to results in net profit growth of 9% to DKK37.9bn. A dividend of DKK7.6 per share was a notch better than our estimate of DKK7.5. A new share buy-back programme of up to DKK16bn was announced for the year, but with the optionality of being stalled if an acquisition opportunity arises. Weak outlook for 2017 came as a surprise to the market, which was gradually getting used to the already soft preliminary guidance given at the time of the Q3 results. The guidance range has been increased from the standard four percentage points (followed by Novo Nordisk typically) to five. Sales are now guided to fall between a decline of 1% and a growth of 4% in LC (vs low single-digit growth in the preliminary outlook). The operating profit is now estimated to come between -2% and 3% (vs flat-to-low single-digit growth in the preliminary guidance), while the forex tailwind is expected to contribute 2ppt to both the top-line as well as the operating profit. This coupled with higher guidance for tax (21-23%) and capex (DKK10bn, attributable to the construction of an API manufacturing facility in the US) is likely to put further pressure on the cash flows for the year
Another downgrade triggers panic; our first take on the results
28 Oct 16
Novo Nordisk released its Q3 results today with a mixed set of numbers for the quarter but yet another downgrade was the biggest disappointment. It has further revised down its long-term operating profit growth guidance from 10% to 5%, following the first downgrade at the beginning of this year from 15% (set in 1996) to 10%. While the revision from 15% to 10% was a practical acknowledgment of the market’s realities and hence was not perturbing for us, today’s revision is worrying. For 2016 as well, the outlook has been narrowed from 5-7% to 5-6% for sales and from 5-8% to 5-7% for operating profit. NB all sales numbers are in local currencies, unless specified otherwise. The Q3 sales grew by 5% in LC (6% in Q2) and by 3% in DKK to DKK27.5bn, with the main underperformance coming from the mature modern insulins – NovoRapid (-3%), NovoMix (-3%) and Levemir (-4%) – witnessing a combined sales decline of 4%. The new-generation insulin – Tresiba and Ryzodeg – fared well (combined sales of DKK1.1bn), while Victoza grew at a sequentially lower 10% (13% in Q2 and 15% in Q1), primarily due to a 4% decline in Europe (vs 3% growth in Q2). In total, the Diabetes segment grew by 5% (vs 7% growth in Q2 and Q1) to DKK22.3bn. The Biopharma business continued on Q2’s lines with 1% growth (vs 15% in Q1) to DKK5.2bn. Operating profit increased by 5% in LC and by 4% in DKK; the margin improved by 40bp yoy to 45.1% (vs 45.5% in Q2). Net profit grew by 17% in DKK to DKK9.8bn.
Correction opens the buying window
17 Oct 16
The massive sell-off triggered by the weak Q2 performance has been accelerated by the subsequent negative news-flow in the last few months, sending it back into the value-stock zone. After truncating the sales growth outlook for FY16 from 5-9% to 5-7% and the operating profit growth from 5-9% to 5-8%, Novo Nordisk has, most recently, reported receiving the CRL from the FDA on FIAsp (Faster-Acting Insulin Aspart – a combination of rapid-acting insulin aspart (NovoLog), nicotinimide and arginine).
Difficult US prompts another guidance downgrade, this time for 2016
07 Aug 16
Novo Nordisk released disappointing numbers for its Q2. Sales of DKK27.5bn were behind our as well as the consensus estimates. They represented a LC growth of 6% (vs 9% in Q1 16), with currency headwinds shaving off 5% points (vs 1% negative impact in Q1 15) from this. NB All sales growth numbers are in LC, unless specified otherwise. The underperformance came from a contract loss for Novolog in the US, lower price increases compared to historical years, wholesaler inventory management and lower NovoSeven sales due to competition. The diabetes and obesity care business grew by 7% (at par with 7% in Q1 16), but granular assessment shows that the lower growth in the US (+5% vs 9% in Q1), and International markets (+8% vs 14% in Q1) was balanced surprisingly by 20% growth (vs 3% in Q1) in China. Although the new-generation insulin (+205%; Tresiba, Ryzodeg and Xultophy) came up along the expected lines, modern insulins (-2% vs +3% in Q1 16) came as a negative surprise to us. All the three modern insulins – NovoRapid, NovoMix and Levemir – were worst hit in the US with a combined decline of 8% (vs 1% growth in Q1), mitigated to some extent by impressive growth in China (+26%). Victoza’s strong, though sequentially softer, growth (Q2 16:+13%, Q1:+15%) drove the 5% growth of the total diabetes business in the US. The Biopharma business aggravated the pain at a mere 1% growth (vs +15% in Q1) with underperformance again coming primarily from the US (-3% vs +21% in Q1) as the competition intensifies. The operating profit increased by 5% in LC (flat in DKK), with the margin declining by 60bp due to the lower sales of high-margin NovoSeven, increased spending on the ramp-up of capacity and marketing spend on Saxenda, NovoEight and Tresiba. The hedging gain of DKK105m (vs loss of DKK1.9bn in Q2 15), however, provided fillip to net profit (+19% in DKK), which came in at ~DKK10bn. Outlook in LC has been clipped, due to the competition in both the US diabetes market as well as the biopharmaceutical business. The top-line growth range of 5-9% for 2016 has been revised down to 5-7%, while the range of operating profit has been narrowed from 5-9% to 5-8%. The financial loss associated with forex hedging contracts has been increased from DKK200m to DKK600m. Capex requirement remains high due to the expansion of the manufacturing capacity for biopharma products, for API production, an expansion of the diabetes care filling capacity and construction of new research facilities.
Excellent pipeline support as fx tailwind dissipates
16 May 16
Novo Nordisk’s Q1 16 sales were up by 9% in LC (+8% in DKK) to DKK27.2bn, with the highest contribution coming from Victoza (+15%, 16% in DKK), followed by Tresiba (+117%, +113% in DKK) and Levemir (+9%, 8% in DKK). Overall, the Diabetes and Obesity franchise was up 7% (+6% in DKK) and the Biopharma business grew by 9% (+8% in DKK). The forex tailwind that the company enjoyed last year was absent this time, leading to the 9% LC sales growth translating into 8% DKK-reported growth. 64% of the growth came from the US (+12%), primarily driven by Victoza, Levemir and Tresiba, and also by a net positive impact of a one-off adjustment to rebates in the Medicaid patient segment, but offset to some extent by the declines in NovoRapid (-7%), NovoMix (-8%), Human Insulin and Novolog. International geographies (+15%; 3% in DKK) were driven by all three modern insulins (+16%), Victoza (+29%) and Tresiba (+142%), while Europe and China remained unimpressive at 1% and 3% growth, respectively. Adjusted operating profit, excluding the income from the partial divestment of NNIT last year, was up by 7% (in DKK; below the 2016-20 growth target of 10%) to DKK11.5bn, reflecting a 40bp dip in the margin to 45.2%. Outlook for 2016 in LC has been maintained but fx is likely to have a bigger headwind than anticipated earlier. DKK sales growth guidance has been lowered to 2-6% (from 4-8% earlier), while the operating profit growth guidance has been revised down to 1-5% (from 4-8% earlier). At the net profit level, however, we expect the hedging gains (mainly related to the $/DKK) to cover up for the fx losses.
Results strong but market perturbed by lower guidance
09 Feb 16
Novo Nordisk’s Q4 performance was in line with our expectations, although downward revision of long-term growth expectation and waning forex benefit weighed on the stock. The share price plunged 7% on 3 February when the results were announced and, aggravated by sector volatility, has lost another 10% since then (as of 8 February). Sales for the quarter grew by 8% in LC and 17% in DKK to DKK29.9bn, led by Victoza (+10% in LC and 22% in DKK), Levemir (+22% in LC and 34% in DKK) and healthy forex benefits. EBIT grew by 21% to DKK11.1bn (although the margin has been sliding sequentially – 46% in Q2, 45% in Q3 and 38.5% in Q4). For the year, sales growth of 8% in LC (+22% reported) was in line with management guidance of 7–9%. Adjusted operating profit was up by 14% in LC (36% in DKK) to DKK47bn. However, hedging losses worth DKK5bn from forward contracts pared some forex benefits from the net profit which ended 32% higher to DKK34.9bn (including DKK2.4bn gain on partial divestment of NNIT). The dvidend was increased by 28% to DKK6.4, representing a payout of 47%, pretty much in line with our expectation. Introduction of a bi-annual dividend has been proposed, along with the new share buy-back plan worth DKK14bn for 2016. The outlook for 2016 is disappointing at 5-9% LC growth for both revenue and operating profit. A strengthening DKK will remove the forex windfall that it enjoyed in 2015; consequently, the growth in DKK is now guided to be a percentage point lower than the LC growth (unlike the 22% sales growth in DKK vis-a-vis 8% LC growth in 2015). Capex guidance of DKK7bn, representing the investments going towards expanding manufacturing capacity, is higher than our expectation. A bigger disappointment for the market, however, was the pruning down of long-term operating profit growth guidance of 15% to 10%.
Panmure Morning Note 15-02-2017
15 Feb 17
With the early January trading update having prompted us to upgrade forecasts, today’s interim results show how the group’s focus on areas such as product development and international sales are translating through to growth in both the top and bottom-line. The consistency of delivery is what impresses us, reflecting the maturity of the management team and the clarity of the longterm vision. We repeat our Buy recommendation.
N+1 Singer - Morning Song 22-02-2017
22 Feb 17
CORETX (COR LN) Contract wins and new Lifestyle facility | Gooch & Housego (GHH LN) Solid Q1 trading plus earnings enhancing acquisition of StingRay Optics | NCC Group (NCC LN) Further issues in Assurance | PCI-PAL (PCIP LN) Strong H1 underpins positive outlook | UBM (UBM LN) Results | Verona Pharma (VRP LN) Phase IIa RPL554 add-on trial to tiotropium commenced
N+1 Singer - Morning Song 21-02-2017
21 Feb 17
Abzena (ABZA LN) Contract bookings strong; US costs higher than expected | City of London Investment Group (CLIG LN) Earnings and interim dividend in line, some modest growth in FuM | dotdigital Group (DOTD LN) Good H1; broadening avenues of growth | Grafenia (GRA LN) Weak print volumes | Vernalis (VER LN) Interims highlight increasing Tuzistra™ scrip volume
Panmure Morning Note 20-02-2017
20 Feb 17
Chi-Med has announced the initiation of a Phase II study of savolitinib in locally advanced or metastatic pulmonary sarcomatoid carcinoma (PSC) in China. This is a disease where patients are usually diagnosed by normal pathology (i.e. not via molecular diagnostics methods) but given that 20-30% of PSC patient show c-Met gene amplification this potentially represents a very rich patient pool for savolitinib as a highly selective and potent oral c-Met inhibitor. The continued strength of Chi-Med’s clinical momentum is further demonstrated by today’s news and we consider this represents further upside potential against our existing investment case. We repeat our Buy recommendation.
Panmure Morning Note 15-02-2017
15 Feb 17
We expect Vernalis to report interim results to December on 21st February. We adjust our forecasts slightly ahead of the results, taking into account the $3m milestone payment from Corvus received yesterday, a slightly more cautious outlook for FY Tuzistra sales and the effect of exchange. We expect results to focus on Tuzistra and also the outlook for the 2017-18 season when we expect Vernalis to have 3 cough-cold products on the market. We maintain our BUY recommendation and 65p price target.
Capital increase to support accelerated growth
14 Feb 17
Collagen Solutions is a biomaterials company developing and manufacturing medical grade collagen components for use in medical devices, research, and regenerative medicine. A number of investment initiatives have been introduced over the last year to accelerate the rate of growth, including global commercial infrastructure and the development of a pipeline of finished medical devices. The company has announced a capital increase, as well as some strategic investor venture debt, to raise gross funds of up to £12.0m to fund these initiatives, with a target of generating a five-fold sales increase over 5 years and profitability in 2019.