Novo Nordisk: Big Gains In Diabetes And Obesity Care

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Danish pharmaceutical giant Novo Nordisk (NVO) released its fourth quarter results, reporting $7.1 billion in revenues, up 22% year-over-year compared to $5.8 billion a year ago, reports Todd Shaver, editor of Bull Market Report.

The company posted a profit of $1.9 billion, or $0.83 per share, as against $1.6 billion, or $0.73, with a handy beat on consensus estimates at the top- and bottom-lines, sending the stock higher. The stock is up from $111, where we added it in July last year. We’re here to tell you the company is doing well, and the sales and earnings will continue to expand.

The company released its full-year figures, with revenues at $25.4 billion, up 26% year-over-year compared to $20.0 billion a year ago. Profits for the year stood at $8.0 billion, or $3.50 per share, up 16% year-over-year as against $6.9 billion a year ago, or $2.97. It has managed to post these results despite strong headwinds, ranging from adverse exchange rates to supply constraints.

Novo Nordisk’s GLP-1 diabetes therapies led the way during the quarter, with $3.5 billion in sales, up 49% year-over-year. The diabetes care segment overall posted $5.4 billion in revenues, up 21% year-over-year.

The company’s new blockbuster obesity care segment posted growth of 123% year-over-year for the full-year, but insulin sales registered a drop of 9% year-over-year, largely owing to intensifying competition. The expected volume across its diabetes and obesity drug wasn’t fully realized, largely owing to persistent supply-chain constraints, which are set to be resolved this year.

In addition, the company’s pipeline remains as robust as ever, with Phase 2 and Phase 3 trials continuing across a broad range of candidates. The most noteworthy one being Ziltivekimab, for heart failures, which is set to initiate Phase 3b trials this quarter.

Given its remarkable free cash flow, Novo Nordisk has authorized a fresh 12-month stock buyback program of $4 billion in addition to the $1.78 per share in dividends for the full-year of 2022, amounting to $3.67 billion given back to shareholders.

The company maintains a robust liquidity profile, with $24 billion in cash, $26 billion in debt, and an impressive $11.3 billion in cash flow for the year. We’re excited to raise the target price to $165 and our sell price to $125 per share.

About the Author

Todd Shaver became editor-in-chief following a distinguished tenure in the money management business with both Morgan Stanley and Salomon Smith Barney. In the 1980's, he ran his own real estate company, The Dulles Group, which specialized in finding large tracts of raw land for investors and developers.

In the 1990's, Mr. Shaver was the host of a successful local radio show, The Bull Market Report, on business radio in Washington, DC, giving a live show each morning during rush hour. He was a regular guest on Business News Network radio, where he applied his knowledge of the markets to find quality growth stocks. Mr. Shaver has been managing money for over three decades now.

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