Analyst Note| Karen Andersen, CFA |
We're raising our Novo Nordisk fair value estimate to $110/DKK 780 from $97/DKK 640 following solid first-quarter results despite supply disruptions for new obesity drug Wegovy. Novo Nordisk's sales grew 18% at constant currencies in the first quarter, with double-digit growth in the U.S. and internationally driven by 45% growth in GLP-1 sales in diabetes. GLP-1 diabetes market growth continues at an impressive pace (30% in the U.S. in the quarter), as these therapies are moving earlier in the treatment cascade and now more frequently used following generic metformin. Management significantly raised sales growth guidance to 10%-14% at constant currencies for the full year, factoring in a tailwind from stronger supply of new obesity drug Wegovy in the second half of the year but also some headwind from overall GLP-1 supply constraints as well as a 3-percentage-point hit to China insulin sales as part of their inclusion in the country's volume-based procurement system. We've raised our GLP-1 sales projections in the second half of the year, factoring in a boost from the upcoming launch of the high-dose version of diabetes drug Ozempic, as well as sales for hemophilia drug candidate concizumab, which we've added to our valuation model. Overall, Novo's continued innovation in diabetes continues to support a wide moat rating.