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Novo Nordisk's (NVO) Q2 Earnings and Sales Beat Estimates

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Novo Nordisk A/S (NVO - Free Report) reported second-quarter 2021 earnings of 85 cents per American Depositary Receipt (ADR), beating the Zacks Consensus Estimate of 76 cents. The company reported earnings of 67 cents in the year-ago quarter.

Revenues of $5.3 billion increased 10% at Danish kroner and 17% at constant exchange rate (CER). The same also surpassed the Zacks Consensus Estimate of $5.2 billion. Sales were driven by higher Diabetes and Obesity care sales.

During the second quarter of 2021, sales growth was positively impacted by COVID-related destocking as well as inventory changes and the timing of shipments in 2021.

Shares of Novo Nordisk have rallied 40.6% so far this year compared with the industry’s rise of 14%.

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Image Source: Zacks Investment Research

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

Quarter in Detail

Novo Nordisk operates under two segments, namely Diabetes and Obesity Care, and Biopharmaceuticals.

The Diabetes and Obesity Care segment sales grew 37% at CER. In Diabetes Care, fast-acting insulin, Fiasp revenues surged 58% at CER. While NovoRapid revenues dipped 1% at CER, Human insulin revenues were down 9% at CER. Premix insulin (Ryzodeg and NovoMix) revenues rose 5% at CER. Sales of long-acting insulins (Tresiba, Xultophy and Levemir) increased 3% at CER. Ozempic had a strong launch and recorded sales of DKK 7.43 billion for the quarter, up 65% at CER.

Obesity Care (Saxenda and Wegovy) sales were up 63% at CER year over year.

We remind investors that in June 2021, the FDA approved semaglutide as a weekly 2.4 mg injection for weight management in people living with obesity. The GLP-1 product will be marketed under the brand name Wegovy for chronic weight management in adults with obesity (initial BMI≥30 kg/m2) or overweight (initial BMI≥27 kg/m2) with at least one weight-related comorbidity, such as high blood pressure, type II diabetes or high cholesterol.

Sales in the Biopharm segment were up 13% at CER year over year to DKK 5.01 billion. Sales of rare blood disorder products increased 20% at CER to DKK 2,723 million, driven by the launch of Esperoct and Refixia, partially offset by declining NovoSeven sales. Sales of haemophilia A products increased 66% at CER. Haemophilia B products’ sales surged 43% at CER. Sales of NovoSeven rose 10% to DKK 1,875 million.

Sales and distribution costs climbed 8% in Danish kroner and 15% at CER year over year. The increase was due to International Operations and North America Operations reflecting the launch of Rybelsus and promotional activities related to Ozempic.

Research and development costs were up 20% in Danish kroner and 23% at CER from the respective year-ago quarter’s levels. Higher cost in this quarter is reflecting low activity level that occurred in the second quarter of 2020 due to COVID-19 pandemic.

Administrative costs increased 9% in Danish kroner and 14% at CER from the respective levels registered in the same period of 2020.

2021 Outlook

Novo Nordisk now expects 10-13% sales growth at CER. The guidance indicates persistent sales growth in North America Operations and International Operations. The same also suggests a robust sales performance of GLP-1 diabetes care products, namely Ozempic and Rybelsus, as well as growth within the Obesity Care unit. This apart, the outlook implies intensifying competition in both Diabetes care and Biopharm.

Novo Nordisk faces stiff competition from Eli Lilly (LLY - Free Report) and Sanofi (SNY - Free Report) in the global insulin market. Lilly and AstraZeneca (AZN - Free Report) are its rivals 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 on both revenues and earnings in the second quarter. Ozempic is off to a solid start and the launch of Rybelsus looks encouraging. Also, COVID-related destocking positively impacted sales growth.

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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