Novo Nordisk Earnings: Why Investors Should Be Watching Wegovy Numbers

TradingKey - Investors in health care companies have had some great years in recent times. That’s mainly been down to the firms that sell the latest blockbuster weight-loss drugs, known as GLP-1 drugs.

One of the world’s biggest purveyors of these drugs is Novo Nordisk A/S (NYSE: NVO), a Danish pharmaceuticals company that sells its hit GLP-1 drug named Wegovy. The success of the weight-loss drug has propelled Novo Nordisk towards the top of the market cap tables of companies in Europe.

Indeed, over the past five years, Novo Nordisk shares are up close to 300%. The company is set to report it latest Q3 2024 numbers on Wednesday (6 November) before the market opens in the US. Here’s why investors should be focused on how Wegovy does when the Danish firm reports. 

Revenue and profit outlooks diverge in Q2 2024

When Novo reported its Q2 2024 earnings in early August, the company announced that its revenue had risen 25% year-on-year to 133.4 billion Danish Kroner (US$19.5 billion) during the period. However the company’s net profit was 20.1 billion Danish Kroner and came in below expectations for the quarter.

Novo Nordisk also cut its outlook for operating profit for the whole of 2024, saying it would show year-on-year growth of between 20% and 28% – down from the previous guidance of between 22% and 30% growth.

This miss saw the company’s American Depository Receipt (ADR) shares in the US crater 7% initially. Some of the bad news on the operating profit side was offset by the fact that Novo Nordisk raised its full-year revenue guidance to between 22% and 28% growth, up from the range of between 19% and 27% previously.

Competition heating up in the weight-loss space

For investors, sales of Novo Nordisk’s big blockbuster GLP-1 drug – Wegovy – will be a big metric to watch. In Q2 2024, the company made 11.7 billion Danish Kroner from the drug – up 55% year-on-year from the same period in 2023.

While this was impressive, it also fell short from an optimistic consensus forecast for 13.5 billion Danish Kroner in sales. The company also sells the drug Ozempic – which is the same thing as Wegovy but sold under a different brand name and dose, and prescribed to treat Type 2 diabetes.

Sales of Ozempic for the quarter came in at 28.9 billion Danish Kroner, falling slightly short of estimates. One of the main reasons for the shortfall was that sales were constrined by supply shortages in both Wegovy and Ozempic.

Novo Nordisk CFO Karsten Munk Knudsen did later clarify that the lower-than-expected sales of Wegovy for the quarter were related to rebates tied to 2023 sales of the drug and said that went some way to explain the “surprise” number on Wegovy sales. 

He went on to say that Wegovy prescriptions in the US had doubled so far in 2024, from 100,000 per week to 200,000 per week. 

Despite this success for Wegovy and Ozempic, investors are looking at competitors in the weight-loss space that are releasing their own drugs. Examples include massive pharmaceuticals firm Eli Lilly & Co (NYSE: LLY), which has come out with Zepbound.

How much market share these GLP-1 competitors can take away from Wegovy and Ozempic is front and centre for investors as Novo Nordisk reports its latest earnings on Wednesday.

Novo Nordisk’s US-listed ADRs are up 9.6% so far in 2024 and that trails the 20.8% positive return from the S&P 500 Index over the same period.