Novo Nordisk NVO is anticipated to beat estimates when it reports its third-quarter 2023 results on Nov 2, before the opening bell.
Let’s see how things are shaping up for the quarter to be reported.
Factors at Play
Novo Nordisk operates under two segments: Diabetes and Obesity Care and Rare disease.
The company’s revenues in the last reported quarter were driven by higher sales of Diabetes and Obesity Care products. Diabetes medicines like Ozempic, Rybelsus and Human insulin are expected to have put up a strong performance in the third quarter of 2023 as well.
Obesity Care (Saxenda and Wegovy) sales were up significantly year over year in the second quarter of 2023, primarily due to increased Wegovy sales. This was observed after a second contract manufacturer for Wegovy initiated production in April 2023 to meet the increasing demand for the drug. Hence, the strong sales trend of Wegovy is expected to have continued into the to-be-reported quarter, boosting revenues from this segment.
Net sales in the Rare disease segment were down in the last reported quarter due to a temporary reduction in manufacturing output. This trend is likely to have continued in the third quarter. In the Rare disease segment, only the Hemophilia A and B drugs witnessed year-over-year growth in the previous quarter. These drugs are also likely to have contributed to the company's revenues in the to-be-reported quarter.
Higher costs driven by clinical activity for late-stage studies are likely to have escalated research and development costs in the quarter to be reported.
Higher distribution costs, promotional activities and Obesity care market development activities are likely to have spiked Novo Nordisk’s sales and distribution costs in the third quarter of 2023.
We would like to remind the investors that last month, Novo Nordisk upped its sales and operating profit forecast for 2023 yet again on the back of higher demand for diabetes drug Ozempic and obesity drug Wegovy.
Sales for 2023 are projected to grow 32-38%, up from the earlier mentioned 27-33%. Operating profit growth is now estimated at 40-46%, up from the previous 31-37% estimate.
Please note that the company raised its annual guidance concurrent with second-quarter results earlier.
Earnings Surprise History
The company has a mixed earnings surprise history. Earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, matched once and missed on another occasion, the average negative earnings surprise being 0.28%.
Year to date, shares of Novo Nordisk have shot up 42.7% compared with the industry’s 2% rise.
Image Source: Zacks Investment Research
What Our Model Predicts
Our proven model predicts an earnings beat for Novo Nordisk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Earnings ESP: NVO has an Earnings ESP of +17.84%, as the Most Accurate Estimate currently exceeds the Zacks Consensus Estimate by 11 cents per share.
Zacks Rank: The company currently carries a Zacks Rank #2.
Novo Nordisk A/S Price and Consensus
Novo Nordisk A/S price-consensus-chart | Novo Nordisk A/S Quote
Other Stocks to Consider
Here are some other stocks in the same industry that too have the right combination of elements to beat on earnings this time around:
bluebird bio BLUE has an Earnings ESP of +19.13% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of bluebird have declined 57.4% year to date. It beat earnings estimates in each of the last four quarters. BLUE has an earnings surprise of 89.60%, on average.
ACADIA Pharmaceuticals ACAD has an Earnings ESP of +6.76% and a Zacks Rank #2 at present.
Shares of ACADIA have gained 41.8% year to date. It beat earnings estimates in two of the last four quarters while missing the mark on the other two occasions. ACAD has an earnings surprise of 20.33%, on average.
Ligand Pharmaceuticals LGND has an Earnings ESP of +2.94% and a Zacks Rank #1 at present.
Shares of Ligand have decreased 21.7% year to date. It beat earnings estimates in three of the last four quarters while missing the mark on one occasion. LGND has a positive earnings surprise of 52.47%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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