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Novo Nordisk's (NVO) Q1 Earnings and Sales Beat Estimates

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Novo Nordisk A/S NVO reported first-quarter 2021 earnings of 88 cents per American Depositary Receipt (ADR), beating the Zacks Consensus Estimate of 79 cents. The company reported earnings of 75 cents in the year-ago quarter.

Revenues of $5.4 billion remained flat in Danish kroner and increased 7% at constant exchange rate (“CER”). Revenues also surpassed the Zacks Consensus Estimate of $5.0 billion. Sales were driven by higher Diabetes and Obesity care sales, owing to elevated GLP-1 sales, offset by insulin revenue decline.

Sales were negatively impacted by COVID-19-related stocking that took place in the year-ago quarter, partially offset by inventory changes and shipments timing in 2021.

Shares of Novo Nordisk have increased 6.1% in the year so far compared with the industry’s rise of 3.3%.

price chart for NVO
price chart for NVO

All growth rates mentioned below are on a year-over-year basis.

Quarter in Detail

Novo Nordisk operates in two segments — Diabetes and Obesity Care, and Biopharmaceuticals.

The Diabetes and Obesity Care segment sales grew 9% at CER. In Diabetes Care, fast-acting insulin (Fiasp and NovoRapid) revenues declined 4% at CER and Human insulin revenues were up 2% at CER. Premix insulin (Ryzodeg and NovoMix) revenues rose 6%. Sales of long-acting insulins (Tresiba, Xultophy and Levemir) were flat. Ozempic had a strong launch and recorded sales of DKK 6.66 billion for the quarter, up 52% at CER.

Obesity Care (Saxenda) sales were up 9% at CER year over year.

Sales in the Biopharm segment were up 1% at CER year over year to DKK 4.97 billion. Sales of rare blood disorder products increased by 2% at CER to DKK 2,678 million, driven by the launch of Esperoct and Refixia, partially offset by declining NovoSeven sales. Sales of haemophilia A products increased by 16% at CER. Haemophilia B products’ sales increased by 18% at CER. Sales of NovoSeven decreased by 2% to DKK 1,980 million.

Sales and distribution costs increased 9% in Danish kroner and 16% at CER year over year. The increase was driven by North America Operations, reflecting the launch of Rybelsus and promotional activities related to Ozempic.

Research and development costs increased 4% in Danish kroner and 7% at CER from the year-ago quarter. The costs were driven by increased clinical study activity and ongoing cardiovascular outcome studies – SOUL and SELECT.

Administrative costs increased 1% in Danish kroner and 3% at CER from the same period in 2020.

2021 Outlook

Novo Nordisk now expects 6-10% sales growth at CER. The guidance reflects persistent sales growth in International operations. The guidance also reflects robust sales performance of GLP-1 diabetes care products, Ozempic and Rybelsus, as well as growth within Obesity Care. The guidance also reflects intensifying competition in both Diabetes care and Biopharm.

Notably, Novo Nordisk faces stiff competition from Eli Lilly LLY and Sanofi SNY in the global insulin market. The company also faces competition from Lilly and AstraZeneca AZN in the global GLP-1 market.

Persistent pricing pressure within Diabetes Care, especially in the United States, might also negatively impact sales.

Our Take

Novo Nordisk beat both revenues and earnings estimates in the first quarter. Ozempic is off to a solid start and the launch of Rybelsus looks impressive. However, adverse impacts of COVID-19 are likely to affect its performance in the future quarters.

Novo Nordisk AS Price, Consensus and EPS Surprise

Novo Nordisk AS Price, Consensus and EPS Surprise
Novo Nordisk AS Price, Consensus and EPS Surprise

Novo Nordisk AS price-consensus-eps-surprise-chart | Novo Nordisk AS Quote

Zacks Rank

Novo Nordisk currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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