Solid figures, mixed forecasts… Novo continues to blow hot and cold. But after the stock's plunge, the market may well be satisfied with that.
The Danish pharmaceutical giant reported 18% sales growth in Q1 and operating profit of 38.8bn DKK, above expectations. But behind these strong figures, Novo Nordisk is reducing its targets for 2025. This is due to a sharper-than-expected decline in prescriptions for its GLP-1 treatments in the US, which face competition from locally produced versions. The group now anticipates annual revenue growth of 13% to 21% (down from 16% to 24%) and operating profit growth of 16% to 24% (down from 19% to 27%). This is a cautious adjustment in a US market that has become more difficult to read.
I will sum up the general feeling with a succinct statement: "It's not exactly inspiring, but it's the lesser evil. And after a 30% drop in 2025 and nearly 50% in a year, some of the disappointment is finally priced in."
Novo was knocked off its pedestal several months ago. The market thought that the Danish company and its competitor Eli Lilly would benefit, for years, from the generous and unassailable profits of their duopoly in anti-obesity drugs. However, barriers to entry have proved lower than expected and the expected stratospheric growth has been scaled back. We are still in the high end of the market: laboratories of this size posting double-digit annual growth are few and far between. But the dream is over.
Perhaps a little too much: Novo is trading at less than 14x 2026e earnings. That's cheap enough to create some buying opportunities despite a reduction in its target.
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