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Novo Nordisk (NVO) Q1 Earnings: Strong Sales Growth and Raised Guidance Amidst Pricing Pressures

Novo Nordisk (NVO) $126 Maintaining Buy Recommendation.

No surprise, Novo too, increased its outlook like its competitor Eli Lilly.

Increased full-year outlook on the back of strong Q1 results, driven by increased demand for its GLP-1-based diabetes and weight-loss drugs Ozempic and Wegovy.

Q1- Blockbuster sales double The Danish drugmaker’s total Q1 revenue jumped 22% Y/Y to DKK 65.35B ($9.39B), as sales of its blockbuster drugs surged: Wegovy sales more than doubled to DKK 9.38B ($1.35B); Ozempic sales grew 43% in constant currency to DKK 27.81B (~$4B).

Novo (NVO) now expects sales growth of 19%-27% in constant currency this year, slightly higher than its prior guidance of 18%-26% growth. Operating profit growth is projected to be 22%-30% in constant currency, compared to its earlier forecast of 21%-29%.

The raised guidance reflects the expected volume growth of its diabetes and obesity drugs, both in the U.S. and internationally, although pricing pressures are expected to continue.

The company also continues to see supply constraints and resulting GLP-1 drug shortages and is spending in internal and external capacity to boost supplies.

Pricing pressure – Despite the upbeat outlook, Novo (NVO) fell 3% in early U.S. premarket trade on Thursday. To note, the stock has gained close to 25% so far this year. 

Novo Nordisk CFO Karsten Munk Knudsen said on a conference call with reporters that prices of the products were “slightly down” last quarter and that the company expects them to continue to decline this year, according to Reuters.

Novo (NVO) faces stiff competition in the weight-loss drug market from Eli Lilly (LLY), which has also seen surging demand for its GLP-1 drugs Zepbound and Mounjaro.

Categories
Stocks

Eli Lilly Q1 Earnings: Strong EPS Beat and Raised 2024 Guidance Amid Soaring Demand for Obesity Drugs

Eli Lilly (LLY) $790 Pre-Market – Up 6% – We’ve had a Buy on it and will continue to add on declines.

Lilly posted great results, but more importantly raised 2024 guidance by $2Bn (5-6%), leading to the pre-market jump! Obesity drugs have a huge demand, which they’re struggling to fill.

Eli Lilly press release (NYSE: LLY): Q1 Non-GAAP EPS of $2.58 beats by $0.09.

Revenue of $8.77B (+26.0% Y/Y) misses by $160M.

Revenue in Q1 2024 increased by 26%, driven by Mounjaro, Zepbound, Verzenio and Jardiance.

2024 full-year revenue guidance raised by $2.0 billion; reported EPS guidance raised $1.25 to be in the range of $13.05 to $13.55 and non-GAAP EPS guidance raised $1.30 to be in the range of $13.50 to $14.00 vs $12.46 Consensus.

Categories
Pharmaceuticals

Eli Lilly (LLY) Analysis: A Buy on Declines with Strong Growth Prospects

Eli Lilly – (LLY) $740 Buy on declines, Long term annual return 11-16%.

Eli Lilly’s forecasted earnings and revenue growth for the next three years are very impressive at a CAGR of 28% and 16%, respectively. To put that in context, it’s a lot higher than the 11% and 6%, 10-year average. 

Why?

Three blockbuster drugs mainly

Mounjaro, weight loss grew 8X 

Verenzio, Breast Cancer grew 56%

Jardiance, Blood Sugar grew 33%.

A big chunk of this is already priced into the stock, which has doubled from last year and quotes an expensive 58x earnings or a PEG of over 2. So we’re late to the party. However, given the higher multiples afforded to Big Pharma, specially the ones with massive pipelines that keep bringing new drugs to the market, Eli could still quote 35-40X 2027 earnings of $29, or between $1,015 to $1,160. That translates into an annual gain of 11% to 16%. That’s still quite good given the pedigree and size.

Eli is also very profitable with great operating margins of 30%.

This should also give us some diversification from the heavy reliance on tech and semis, two sectors that are getting overpriced.