We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Novo Nordisk Before Q3 Earnings: How Should Investors Play the Stock?
Read MoreHide Full Article
Novo Nordisk (NVO - Free Report) is expected to beat estimates when it reports third-quarter 2024 results on Nov. 6, before the opening bell. The Zacks Consensus Estimate for quarterly revenues in the to-be-reported quarter is pegged at $10.68 billion, while the same for earnings is pinned at 90 cents per share.
In the past 60 days, the Zacks Consensus Estimate for Novo Nordisk’s 2024 earnings per share (EPS) declined from $3.19 to $3.07. During the same time frame, the company’s 2025 EPS forecast has declined from $4.34 to $4.18.
NVO Estimate Movement
Image Source: Zacks Investment Research
NVO’s Earnings Surprise History
NVO’s performance has been mixed over the trailing four quarters, with earnings beating estimates in three quarters and missing the mark once. On average, Novo Nordisk registered an earnings surprise of 3.18% in the last four quarters. In the last reported quarter, the company reported a negative surprise of 8.45%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Novo Nordisk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Stay up-to-date with all quarterly releases:See Zacks Earnings Calendar.
Factors Shaping NVO’s Upcoming Results
NVO operates under two segments — Diabetes and Obesity Care and Rare disease. Revenue growth in the third quarter of 2024 is expected to have been driven primarily by the strong demand for NVO’s diabetes and obesity care medicines, especially semaglutide. Notably, semaglutide, a GLP-1 agonist, is approved as an Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes (T2D) and as a Wegovy injection for weight management.
Wegovy is likely to have been the key top-line contributor for Novo Nordisk in the to-be-reported quarter on the back of strong prescription trends. Wegovy’s label was expanded in the United States in March 2024 to reduce the risk of serious heart problems in obese/overweight adults, which has been boosting its sales. The drug’s label was also recently expanded in the EU for the same indication. The company is also looking to expand the drug’s label to treat patients with obesity-related heart failure with preserved ejection fraction in the EU and U.S. markets.
Ozempic sales are likely to have increased in the to-be-reported quarter as well based on the trend witnessed in the past few quarters, fueled by rising demand. Quarterly revenues from sales of Rybelsus, Victoza (also for T2D) and fast-acting insulin, Fiasp, are likely to have put up a strong performance in third-quarter 2024, contributing to the top line.
Novo Nordisk’s revenues under the Rare Disease segment are likely to have declined in the to-be-reported quarter, mainly due to lower sales of its hemophilia A products. However, sales of hemophilia B products are expected to have increased year over year.
Novo Nordisk faces serious competition from Eli Lilly (LLY - Free Report) in the diabetes and obesity care market space. Lilly has seen unparalleled success with tirzepatide, a dual GIP and GLP-1 receptor agonist, which is marketed as Mounjaro for T2D and Zepbound for obesity. While other biotech firms, such as Amgen (AMGN - Free Report) and Viking Therapeutics (VKTX - Free Report) , are also making rapid progress with their GLP-1-based diabetes/obesity candidates, we believe that they will take time to catch up with NVO.
NVO’s Price Performance & Premium Valuation
The stock has gained 8.2% in the year-to-date period compared with the industry’s 14% growth. NVO has also underperformed the S&P 500 while outperforming the sector in the same period, as seen in the chart below.
NVO’s Mixed Year-To-Date Stock Performance
Image Source: Zacks Investment Research
Novo Nordisk is trading at a premium to the industry, as seen in the chart below. Going by the price/earnings ratio, the company’s shares currently trade at 27.94 forward earnings, which is more than 17.91 for the industry.
NVO Stock Valuation
Image Source: Zacks Investment Research
Investment Thesis
Novo Nordisk is the global market leader in the GLP-1 segment. The company has been witnessing strong sales trends for its semaglutide medicines. The increasing demand for Wegovy, Ozempic and Rybelsus has been significantly contributing to the top line. Wegovy is now indicated in the United States and the EU to also reduce heart risks, which is a huge win. Further label expansions of these drugs for cardiovascular and other indications will increase the eligible patient population, thereby boosting the top line, subject to approval.
Novo Nordisk has one of the broadest diabetes portfolios in the industry. The company improved its global diabetes value market share in 2023 from 31.9% to 33.8%, primarily due to market share gains in both North America and International operations. In 2023, Novo Nordisk’s GLP-1 sales in diabetes jumped 52%.
In the past five years, total revenues generated by the company surged 90.3% on a reported basis. In 2023, the company reported a net profit margin of 36%, which is the highest recorded in the past five years. During the same period, NVO’s net profit margin remained above 31%, showing consistency.
Despite rising competition, the obesity sector represents a huge untapped market opportunity. Per research conducted by Goldman Sachs, the obesity market in the United States is expected to reach $130 billion by 2030. To capitalize on such an opportunity, Novo Nordisk is investing heavily to optimize its production capacities while also evaluating some other novel obesity candidates in its pipeline.
Should You Invest in NVO Stock?
Novo Nordisk has immensely boosted shareholder value in the past five years. The company’s focus on expanding manufacturing capabilities to meet rising demand for Wegovy is commendable, although not as successful as its arch-rival, Lilly, yet. The updated sales outlook for 2024 indicates higher full-year expectations for both North America and International operating units. Novo Nordisk’s efforts to expand the indications for Wegovy and Ozempic are encouraging. It is also looking to develop new obesity treatments to stay competitive, especially in the U.S. market, which holds significant growth potential.
Thus, we can conclude that NVO is a good stock to retain, no matter how the third-quarter results pan out and the stock’s reaction to the results. Growing market share and profit margins suggest that the company has the potential for further growth in the years to come, primarily driven by increased sales of Wegovy and Ozempic. Though NVO currently trades at a premium to the industry, any major dip in the stock’s price can be used as an opportunity to buy it for long-term gains.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Novo Nordisk Before Q3 Earnings: How Should Investors Play the Stock?
Novo Nordisk (NVO - Free Report) is expected to beat estimates when it reports third-quarter 2024 results on Nov. 6, before the opening bell. The Zacks Consensus Estimate for quarterly revenues in the to-be-reported quarter is pegged at $10.68 billion, while the same for earnings is pinned at 90 cents per share.
In the past 60 days, the Zacks Consensus Estimate for Novo Nordisk’s 2024 earnings per share (EPS) declined from $3.19 to $3.07. During the same time frame, the company’s 2025 EPS forecast has declined from $4.34 to $4.18.
NVO Estimate Movement
NVO’s Earnings Surprise History
NVO’s performance has been mixed over the trailing four quarters, with earnings beating estimates in three quarters and missing the mark once. On average, Novo Nordisk registered an earnings surprise of 3.18% in the last four quarters. In the last reported quarter, the company reported a negative surprise of 8.45%.
Earnings Whispers
Our proven model predicts an earnings beat for Novo Nordisk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Novo Nordisk has an Earnings ESP of +1.02% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Factors Shaping NVO’s Upcoming Results
NVO operates under two segments — Diabetes and Obesity Care and Rare disease. Revenue growth in the third quarter of 2024 is expected to have been driven primarily by the strong demand for NVO’s diabetes and obesity care medicines, especially semaglutide. Notably, semaglutide, a GLP-1 agonist, is approved as an Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes (T2D) and as a Wegovy injection for weight management.
Wegovy is likely to have been the key top-line contributor for Novo Nordisk in the to-be-reported quarter on the back of strong prescription trends. Wegovy’s label was expanded in the United States in March 2024 to reduce the risk of serious heart problems in obese/overweight adults, which has been boosting its sales. The drug’s label was also recently expanded in the EU for the same indication. The company is also looking to expand the drug’s label to treat patients with obesity-related heart failure with preserved ejection fraction in the EU and U.S. markets.
Ozempic sales are likely to have increased in the to-be-reported quarter as well based on the trend witnessed in the past few quarters, fueled by rising demand. Quarterly revenues from sales of Rybelsus, Victoza (also for T2D) and fast-acting insulin, Fiasp, are likely to have put up a strong performance in third-quarter 2024, contributing to the top line.
Novo Nordisk’s revenues under the Rare Disease segment are likely to have declined in the to-be-reported quarter, mainly due to lower sales of its hemophilia A products. However, sales of hemophilia B products are expected to have increased year over year.
Novo Nordisk faces serious competition from Eli Lilly (LLY - Free Report) in the diabetes and obesity care market space. Lilly has seen unparalleled success with tirzepatide, a dual GIP and GLP-1 receptor agonist, which is marketed as Mounjaro for T2D and Zepbound for obesity. While other biotech firms, such as Amgen (AMGN - Free Report) and Viking Therapeutics (VKTX - Free Report) , are also making rapid progress with their GLP-1-based diabetes/obesity candidates, we believe that they will take time to catch up with NVO.
NVO’s Price Performance & Premium Valuation
The stock has gained 8.2% in the year-to-date period compared with the industry’s 14% growth. NVO has also underperformed the S&P 500 while outperforming the sector in the same period, as seen in the chart below.
NVO’s Mixed Year-To-Date Stock Performance
Novo Nordisk is trading at a premium to the industry, as seen in the chart below. Going by the price/earnings ratio, the company’s shares currently trade at 27.94 forward earnings, which is more than 17.91 for the industry.
NVO Stock Valuation
Investment Thesis
Novo Nordisk is the global market leader in the GLP-1 segment. The company has been witnessing strong sales trends for its semaglutide medicines. The increasing demand for Wegovy, Ozempic and Rybelsus has been significantly contributing to the top line. Wegovy is now indicated in the United States and the EU to also reduce heart risks, which is a huge win. Further label expansions of these drugs for cardiovascular and other indications will increase the eligible patient population, thereby boosting the top line, subject to approval.
Novo Nordisk has one of the broadest diabetes portfolios in the industry. The company improved its global diabetes value market share in 2023 from 31.9% to 33.8%, primarily due to market share gains in both North America and International operations. In 2023, Novo Nordisk’s GLP-1 sales in diabetes jumped 52%.
In the past five years, total revenues generated by the company surged 90.3% on a reported basis. In 2023, the company reported a net profit margin of 36%, which is the highest recorded in the past five years. During the same period, NVO’s net profit margin remained above 31%, showing consistency.
Despite rising competition, the obesity sector represents a huge untapped market opportunity. Per research conducted by Goldman Sachs, the obesity market in the United States is expected to reach $130 billion by 2030. To capitalize on such an opportunity, Novo Nordisk is investing heavily to optimize its production capacities while also evaluating some other novel obesity candidates in its pipeline.
Should You Invest in NVO Stock?
Novo Nordisk has immensely boosted shareholder value in the past five years. The company’s focus on expanding manufacturing capabilities to meet rising demand for Wegovy is commendable, although not as successful as its arch-rival, Lilly, yet. The updated sales outlook for 2024 indicates higher full-year expectations for both North America and International operating units. Novo Nordisk’s efforts to expand the indications for Wegovy and Ozempic are encouraging. It is also looking to develop new obesity treatments to stay competitive, especially in the U.S. market, which holds significant growth potential.
Thus, we can conclude that NVO is a good stock to retain, no matter how the third-quarter results pan out and the stock’s reaction to the results. Growing market share and profit margins suggest that the company has the potential for further growth in the years to come, primarily driven by increased sales of Wegovy and Ozempic. Though NVO currently trades at a premium to the industry, any major dip in the stock’s price can be used as an opportunity to buy it for long-term gains.