After lowering its earnings outlook, Novo Nordisk accomplished the remarkable feat of seeing its stock price increase on Wednesday. However, that reflects the difficult times the Danish manufacturer of Ozempic and other medications for weight loss has faced.
In Copenhagen trading, Novo Nordisk’s shares (DK:NOVO.B) (NVO) increased by 6%. However, the company has lost almost 25% of its value this year and is now worth less than half of what it was at its peak in June.
The corporation reported that while revenues increased 19% to 78.09 billion Danish kroner, its first-quarter profit increased 14% to 29 billion Danish kroner ($4.4 billion).
According to Visible Alpha’s survey of analysts, a profit of 27.61 billion kroner on revenue of 78.4 billion kroner was anticipated.
With sales growth at constant exchange rates between 13% and 21%, as opposed to its earlier projection of 16% to 24%, and operating profit growth between 16% and 24%, as opposed to its previous forecast of 19% to 27%, Novo Nordisk said it is now reducing its year outlook.
Novo Nordisk is aiming for 14% sales growth and 15% operating profit growth at the midpoint, taking into account the currency headwinds it forecasts. This is in contrast to analyst predictions of 18% sales growth and 23% operating profit growth.
Analysts at Bank of America note that currency hedging will lessen the impact on Novo Nordisk’s earnings. They also noted that investors had anticipated Novo Nordisk would lower guidance, even if the situation was worse than anticipated.
The forecast was lowered because of the impact of compounded medications produced by other firms, which it claimed was the reason for the lower-than-expected penetration of branded GLP-1 therapies in the United States.
The scientific name for the drug found in medicines like Ozempic, Wegovy, and Eli Lilly’s (LLY) Zepbound, which have witnessed a sharp increase in demand, is GLP-1.
According to Novo Nordisk, fewer patients will be receiving compounded GLP-1 therapies in the second half of the year as a result of the U.S. Food and medication Administration removing semaglutide injections from the medication shortage list.
When the FDA-approved version is unavailable, a company like Hims & Hers (HIMS) can create a customized version using a compound treatment.
Novo Nordisk stated that its goal is to stop what it refers to as dangerous and illegal compounding. Along with Wegovy’s recent decision by CVS (CVS) to make it the only GLP-1 prescription it supplies for weight loss, it’s also increasing access to the weight-loss drug through telehealth organizations.
Novo Nordisk announced that it would cut expenditures to compensate for the decline in sales.
