Novo Nordisk A/S NVO

Novo Nordisk reported first-quarter results that were slightly above our expectations, with 7% top-line growth at constant currencies (flat as reported, due to currency headwinds). This performance is particularly strong, given the pandemic-related stocking that boosted sales in the year-ago quarter; after adjusting for stocking and shipment timing, underlying first-quarter sales growth was closer to 9% at constant currencies. We have raised our forecast for 2021 reported sales growth from 5% to 6.6%, putting it at the higher end of management's new 2%-6% reported sales growth guidance (6%-10% at constant currencies). However, after slightly tempering our U.S. GLP-1 growth estimates for the year, and factoring in upcoming potential pressure on China sales of insulin from volume-based procurement, this doesn't significantly change our valuation, and we're maintaining our fair value estimate of $73/DKK 453 per share. We see U.S. growth slightly improving in 2021 as Novo annualizes some step-ups in affordability initiatives from 2020 for its insulin therapies and as the Rybelsus launch should accelerate. While Novo is increasingly reliant on semaglutide for growth opportunities, diversification among indications and formulations to protect the franchise, in our view, and we think the firm's continued innovation in cardiometabolic-related disorders warrants a wide moat.