Novo Nordisk Q3 2023 Financial Report Review | Wegovy Supply Limited, Expected Stable Stock Price

On November 2nd, Novo Nordisk announced detailed Q3 2023 financial results, with group sales of DKK 58.731 billion, up 2% from the consensus estimate of DKK 57.810 billion, and operating profit of DKK 26.913 billion, up 4% from the consensus estimate of DKK 25.813 billion.

JPM released a report on Novo Nordisk's financial results on November 2nd.

Stock Rating: Overweight

Recent Closing Price: $101.90 (November 13, 2023)

Novo Nordisk Research Logic:

Sales growth was mainly driven by GLP-1 series products for obesity, which were 16% higher than the consensus estimate (DKK 12.255 billion vs DKK 10.562 billion). Wegovy was one of the main products driving growth, with sales of DKK 9.648 billion, higher than the consensus estimate of DKK 7.749 billion.

JPM expects that post-financial report, the market's consensus on operating profit will increase by 2%-3%, but due to low net financial income of about DKK 1.6 billion, the consensus EPS may drop by around 2%. As for the supply issue of Wegovy, the supply of the starting dose will not significantly increase before early 2024, but Novo Nordisk has announced that they have submitted SELECT data and received priority review from the FDA.

Overall, JPM believes that today's stock price volatility will be limited, and while delays in improving US Wegovy supply may cause stock prices to weaken, if the SELECT data is submitted earlier than expected and receives priority review, the consensus number may still rise by 2%-3% under the influence of the financial report.

1. Novo Nordisk pointed out that demand growth for Ozempic and Wegovy continues to cause supply limitations. Consistent with their Q1'23 announcement, Novo Nordisk stated that in order to ensure continuous supply for existing patients of Wegovy, they will continue to limit the supply of lower doses of Wegovy to the US market. They expect supply to gradually increase and confirm that the dosage quantity supplied to the United States each day is increasing, but they do not want to see a significant increase in the supply of the starting dose of Wegovy before early 2024. Even then, they do not want to see a supply inflection point, but rather a more gradual increase.

2. Channels and regulations: a) In September 2023, Novo Nordisk received priority review from the FDA for SELECT data submitted; b) In September 2023, Novo Nordisk initiated Phase 3 trial (REIMAGINE 2) for CagriSema to treat Type 2 Diabetes patients; c) In September 2023, Novo Nordisk also initiated Phase I subcutaneous Amycretin for Obesity to gain supply flexibility. Results for the Phase I oral Amycretin Obesity trial are expected to be released in Q4'23 with full-year results being reported in Feb 2024.