Ozempic, the Weight-Loss Drug, Steps Into Earnings Season Spotlight
Drugs used for weight loss like Ozempic pose a real risk to companies ranging from fast food restaurants to cigarette makers. Expect management teams of public companies to talk about them in their earnings calls.
Ozempic and Wegovy, two weight-loss medications, function by simulating the hormone that signals to people's brains when they are not hungry. Recent anecdotal data indicates that the medicine might reduce users' cravings for both food and addictive drugs like alcohol and cigarettes. According to an analysis from Barclays analysts, the credit market pricing hasn't accurately represented the possible downside.
Food and Restaurants
Short sellers have boosted their bets against restaurant stocks in the past month, with concerns swirling that higher interest rates will pinch consumers' wallets and weight-loss drugs will impact their behavior.
If high-interest rates continue, we should see discretionary consumer spending take a hit and the restaurant sector to continue its downward price trend," said Ihor Dusaniwsky, managing director of predictive analytics at S3. The industry's bottom line will get a "two-fisted blow" if more consumers take GLP-1 drugs — a class of medicines used to treat diabetes and obesity — and their appetites shrink along with their wallets, he said.
Retailers
$Walmart (WMT.US)$'s John Furner told Bloomberg in an interview that the company can track which of its customers are taking the drugs and see they are causing a "slight pullback in overall basket" and "less units, slightly less calories."
Some retailers will benefit from the proliferation of these drugs — those provide prescriptions for these drugs could benefit.
Pharmaceutical companies
$Novo-Nordisk A/S (NVO.US)$ said late Tuesday it was halting a study that looked at the impact of its blockbuster Ozempic drug on kidney failure after it showed effectiveness surprisingly early.
The news hit shares of the world's biggest kidney dialysis providers. $Fresenius Medical Care (FMS.US)$ plunged as much as 24% in Frankfurt, while other kidney-related stocks including $DaVita (DVA.US)$ and $Baxter International Inc (BAX.US)$— which touched an eight-year low — tumbled in US trading Wednesday. Shares of $Outset Medical (OM.US)$ are trading at the lowest since the dialysis machine maker's 2020 debut.
Source: Bloomberg, Market Watch
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Tonyco : Hahaha I think they are grossly overestimating the reach of these drugs if they think it will make a meaningful impact on mcdonalds LOL
Perhaps in many years, when the cost is much lower. Americans can't afford food you think they will pay $80/month for that? They are more likely to try it once and cancel, if at all.
These drugs are great, but side effects need to be improved before you need to worry about a meaningful effect on the general public