Novo Nordisk (NOVO B) released earnings on Wednesday. Here's what our analysts thought of the results
Wide-Moat Novo Nordisk reported 36% full-year constant currency sales growth for the full year 2023, ahead of our expectations and those of consensus, although operating income growth of 44% was in line with our estimates, and we're maintaining our DKK 540 (£61.82) Fair Value Estimate. The share advanced 3,6% on Wednesday following the report, and continued up around 0,7% on Thursday.
The sales outperformance was driven by 52% growth in the firm's GLP-1 diabetes sales (largely Ozempic), despite GLP-1 obesity sales growth of 154% (largely Wegovy) which was slightly below investors' already sky-high expectations.
Key Data Coming on Next-Gen Obesity Drugs
We still forecast a $170 billion global GLP-1 market by 2031, with $120 billion of this from obesity/ overweight and most of the market relatively evenly split between Novo and Lilly. We expect to see key data on next-generation obesity drug candidates this year that could help diversify away from the semaglutide molecule and support Novo's wide economic moat.
In 2024, we expect prescribing labels for semaglutide to extend beyond basic indications in diabetes (where it is approved as Ozempic and Rybelsus) and obesity (as Wegovy), with cardiovascular benefits poised to be added after the clear benefit in the Select trial. Recent positive data in heart failure, kidney disease, and knee osteoarthritis is also encouraging, and we expect additional data in liver disease (end of 2024) and Alzheimer's (2025) could further boost the drug's midterm potential.
With roughly three quarters of Novo's sales now tied to GLP-1 therapies and potential Medicare negotiation (2028) and the semaglutide patent loss (2032) coming into focus, Novo is rightly focused on next-generation cardometabolic drug candidates.
Key Morningstar Metrics for Novo Nordisk Shares
• Fair Value Estimate: 540 DKK;
• Last close: 774,80 DKK;
• Morningstar Rating: 2 stars;
• Morningstar Economic Moat Rating: Wide;
• Morningstar Uncertainty Rating: High.