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Fresenius Medical (FMS) Sinks on Potential Rise in Competition
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Shares of Fresenius Medical Care (FMS - Free Report) declined 17.6% on Oct 11 following the announcement of positive late-stage clinical study data by Novo Nordisk (NVO) evaluating its new diabetes drug, Ozempic (semaglutide).
So far this year, Fresenius Medical’s shares have gained 5.7% against the industry’s decline of 10%. The S&P 500 was up by 14.8% in that same period.
The phase III study evaluated Novo Nordisk’s Ozempic as a therapy for preventing the progression of renal impairment in people with type II diabetes and chronic kidney disease (“CKD”). The study’s promising outcome led to its early completion following a recommendation from an independent data monitoring committee.
Image Source: Zacks Investment Research
Ozempic Data Raises Concern
Fresenius Medical has a major presence in the global dialysis market. The dialysis of patients also drives the majority of the company’s revenues. The positive data from Novo Nordisk’s late-stage study on Ozempic has raised concern about a potential rise in competition for Fresenius Medical’s dialysis business.
Ozempic is currently approved in the United States for the treatment of type II diabetes mellitus in adults, adjunct to diet and exercise. However, the recent late-stage study data demonstrated its ability to delay the progression of CKD and lower the risk of kidney and cardiovascular mortality.
A delay in the progression of CKD and a lower risk of kidney mortality will likely lead to fewer patients requiring dialysis. Any potential disruption in the dialysis market will have a significant impact on FMS’ topline. The company is already grappling with higher costs and expenses that have led to lower operating income guidance for 2023 during the second quarter’s earnings call.
Any loss of sales for Fresenius Medical following the availability of NVO’s Ozempic will further put a strain on the company’s bottom line going forward. The availability of Ozempic may also lead to higher selling expenses to fight competition.
These potential concerns have led investors to dump the stock, leading to a significant decline in the share price yesterday. The magnitude of yesterday’s fall may have provided momentum for further decline over the next few days.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 35% year-to-date compared with the industry’s 38% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 18.7% year-to-date compared with the industry’s 38% growth.
Medpace, carrying a Zacks Rank #2 at present, has an estimated growth rate of 16.2% for 2024. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 22.28%.
The company’s shares have rallied 15.9% year-to-date against the industry’s 12.5% decline.
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Fresenius Medical (FMS) Sinks on Potential Rise in Competition
Shares of Fresenius Medical Care (FMS - Free Report) declined 17.6% on Oct 11 following the announcement of positive late-stage clinical study data by Novo Nordisk (NVO) evaluating its new diabetes drug, Ozempic (semaglutide).
So far this year, Fresenius Medical’s shares have gained 5.7% against the industry’s decline of 10%. The S&P 500 was up by 14.8% in that same period.
The phase III study evaluated Novo Nordisk’s Ozempic as a therapy for preventing the progression of renal impairment in people with type II diabetes and chronic kidney disease (“CKD”). The study’s promising outcome led to its early completion following a recommendation from an independent data monitoring committee.
Image Source: Zacks Investment Research
Ozempic Data Raises Concern
Fresenius Medical has a major presence in the global dialysis market. The dialysis of patients also drives the majority of the company’s revenues. The positive data from Novo Nordisk’s late-stage study on Ozempic has raised concern about a potential rise in competition for Fresenius Medical’s dialysis business.
Ozempic is currently approved in the United States for the treatment of type II diabetes mellitus in adults, adjunct to diet and exercise. However, the recent late-stage study data demonstrated its ability to delay the progression of CKD and lower the risk of kidney and cardiovascular mortality.
A delay in the progression of CKD and a lower risk of kidney mortality will likely lead to fewer patients requiring dialysis. Any potential disruption in the dialysis market will have a significant impact on FMS’ topline. The company is already grappling with higher costs and expenses that have led to lower operating income guidance for 2023 during the second quarter’s earnings call.
Any loss of sales for Fresenius Medical following the availability of NVO’s Ozempic will further put a strain on the company’s bottom line going forward. The availability of Ozempic may also lead to higher selling expenses to fight competition.
These potential concerns have led investors to dump the stock, leading to a significant decline in the share price yesterday. The magnitude of yesterday’s fall may have provided momentum for further decline over the next few days.
Fresenius Medical Care AG & Co. KGaA Price
Fresenius Medical Care AG & Co. KGaA price | Fresenius Medical Care AG & Co. KGaA Quote
Zacks Rank & Stocks to Consider
Fresenius Medical currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , McKesson Corporation (MCK - Free Report) and Medpace (MEDP - Free Report) .
Align Technology, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 35% year-to-date compared with the industry’s 38% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 18.7% year-to-date compared with the industry’s 38% growth.
Medpace, carrying a Zacks Rank #2 at present, has an estimated growth rate of 16.2% for 2024. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 22.28%.
The company’s shares have rallied 15.9% year-to-date against the industry’s 12.5% decline.