Novo Impressed Wall Street with Its 1Q16 Earnings
How Did the Market React to Novo Nordisk's 1Q16 Earnings?
Novo’s revenue in 1Q16
Novo Nordisk (NVO) reported its 1Q16 earnings on April 29, 2016. It reported sales amounting to ~27.2 billion Danish krone for the quarter. Wall Street analysts were expecting it to record ~27.1 billion krone during the period.
Novo surprised analysts by reporting 0.3% higher revenue. Its revenue during the period rose by ~8% on a YoY (year-over-year) basis.
The pillars for Novo’s sales growth were Victoza, Norditropin, Levemir, and Tresiba. NVO’s US sales rose by 14% on a reported basis. US sales remained the main driver of the company’s revenue, with 3% growth flowing from “non-recurring adjustments to rebates in the Medicaid patient segment.”
In 1Q16, Victoza’s sales rose by 16%, whereas Tresiba’s and Levemir’s sales rose by 113% and 8%, respectively, on a reporting basis.
Sales growth for NVO’s peers
Novo’s 8% sales growth in 1Q16 outpaced its peers’ performance numbers. Let’s have a look at how much growth these peers recorded.
Eli Lilly’s (LLY) sales rose by 4.7% in 1Q16, whereas Sanofi (SNY) reported a 0.7% rise in sales in the quarter on a constant currency basis. Merck & Co. (MRK) is expected to witness a 0.2% rise in revenue in its 1Q16 earnings.
Novo’s positive earnings surprise
During 1Q16, Novo reported diluted earnings per share (or EPS) of ~3.7 krone. Wall Street expected its earnings to be ~3.6 krone. After adjusting for non-recurring elements, NVO’s EPS in 1Q16 was 23% higher than its 1Q15 EPS.
NVO’s share price is quite sensitive to events such as earnings releases, performance with respect to expectations, and other macro-economic factors. To avoid the direct risk associated with the equity, investors can opt for the Market Vectors Pharmaceutical ETF (PPH). Novo Nordisk accounts for 5.0% of PPH’s total holdings.
In the next article, we’ll see how Novo’s share price has performed.
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