Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Novo Nordisk shares rise on upbeat outlook

Published 02/02/2022, 01:45 AM
Updated 02/02/2022, 04:40 AM
© Reuters. FILE PHOTO: Flags are seen outside Novo Nordisk headquarters in Copenhagen, Denmark, February 5, 2020. REUTERS/Jacob Gronholt-Pedersen

© Reuters. FILE PHOTO: Flags are seen outside Novo Nordisk headquarters in Copenhagen, Denmark, February 5, 2020. REUTERS/Jacob Gronholt-Pedersen

By Nikolaj Skydsgaard

COPENHAGEN (Reuters) - Shares in Novo Nordisk (NYSE:NVO) rose more than 3% on Wednesday after the Danish drug developer delivered a better-than-expected earnings outlook for 2022 despite missing fourth quarter operating profit expectations.

The world's largest diabetes drug developer expects to generate sales growth of between 6% and 10% in local currencies in 2022 and deliver operating profit growth of 4% to 8%.

"This reflects an underlying unchanged positive growth momentum for Novo Nordisk," Sydbank analyst Soren Lontoft told Reuters, adding that he would be raising his estimates.

Jefferies analysts said Novo's operating profit forecast reflected lower margin pressure than feared.

Novo reported fourth quarter operating profit of 13.63 billion Danish crowns ($2.06 billion), an increase of 16% over the corresponding period last year, but below an average of 14.36 billion forecast by analysts in a Refinitiv poll.

Higher sales and distribution costs in addition to higher research and development spending had impacted the results, Lontoft said.

"It reflects perhaps a more normalized world with increasing absence of restrictions and COVID-19, which has led to increased marketing spending," he added.

Sales for the fourth quarter, however, came in at 38.3 billion crowns, above analysts' estimates of 37.9 billion, driven by sales of new diabetes drug, Ozempic, which rose 64% to 33.7 billion in 2021.

OVERCOMING SUPPLY ISSUES

Novo was overwhelmed by the demand for its Wegovy obesity drug following its release to the U.S. market in June, leading to product shortages.

In December, a contract manufacturer halted deliveries and manufacturing temporarily after issues relating to good manufacturing practice

"Since December, we have worked hard to optimise our internal capacity," Chief Executive Lars Joergensen told reporters on Wednesday.

"Consequently, we now expect that internal capacity in the first half of 2022 will be close to the demand of around 20,000 weekly total scripts as seen in the U.S. market at the end of 2021," Joergensen added.

The supply issues impacted fourth quarter obesity drug sales, which came in below analysts' expectations despite a 55% sales growth.

© Reuters. FILE PHOTO: Flags are seen outside Novo Nordisk headquarters in Copenhagen, Denmark, February 5, 2020. REUTERS/Jacob Gronholt-Pedersen

Shares in Novo Nordisk traded up 3.5% at 0829 GMT.

($1 = 6.6023 Danish crowns)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.