2023-11-17 15:34:39
At the beginning of this year, the share price of the Danish insulin world market leader Novo Nordisk reached the 1,000 Danish crown (DKK) mark for the first time. It was the temporary highlight of a long-term price rally. One of the management’s reactions was a 1:2 stock split, which took place in mid-September. While the number of shares was doubled, the share price was halved. This did not change the market capitalization.
Such a stock split is a popular way for companies to make the price of a share appear cheaper, which makes it more attractive for small investors. However, the company’s recent successes could soon make another split necessary. The Novo Nordisk share price is moving back towards the 1000 DKK mark. On October 13th, another record high was set at DKK 742.
Europe’s most valuable company
Novo Nordisk has also caused a stir in other ways: the company became Europe’s most valuable group in the fall, relegating the long-standing leader, the French luxury goods manufacturer LVMH, to second place. An important reason for the recent rise in Danish shares is the boom surrounding numerous weight loss medications.
FAZ.NET columnist Christoph Scherbaum is a stock market expert and works as a financial journalist in Ludwigsburg. : Image: Christoph Scherbaum
Agents such as Wegovy and Ozempic with the active ingredient semaglutide were originally developed to combat type 2 diabetes. However, more and more people swear by Wegovy, Ozempic & Co. when it comes to losing weight. There has been a real boom around the so-called GLP-1 agents. Not only Novo Nordisk is involved, competitors such as the American company Eli Lilly are also involved.
The Danes, on the other hand, enjoy the advantage of being particularly early. In the meantime, it’s not just a matter of stockbrokers closely eyeing those profiting from the GLP-1 boom like Novo Nordisk. Rather, the question is whether consumer goods companies such as Coca-Cola, Pepsi Co or Nestlé, which rely on the sale of high-sugar foods, will suffer if the weight-loss drugs lead to major sales success.
Strong balance sheet
Novo Nordisk is on the winning side on this point. This is also reflected in the latest business results. In the Obesity Care area, sales increased by 167 percent to DKK 30.4 billion (approx. EUR 4.1 billion) in the first nine months of the 2023 financial year. Group-wide sales revenue was DKK 166.4 billion, an increase of 29 percent. Adjusted for currency effects, the increase was even 33 percent. Operating profit increased by 31 percent to DKK 75.8 billion, while the bottom line was left with a net profit of DKK 61.7 billion, 47 percent more than in the same period last year.
For the year as a whole, management had recently forecast currency-adjusted increases in sales and operating profit of 32 to 38 percent and 40 to 46 percent, respectively. Novo Nordisk can also look forward to good business in the future – after all, it is looking for ways to find additional areas of application for the currently successful GLP-1 agents. The company recently announced that a study showed how Wegovy led to a statistically significant reduction in cardiovascular risks – across characteristics such as age, gender, ethnicity and body mass index (BMI). away.
Impressive price gains
Novo Nordisk is investing accordingly in further growth – also because the actual beneficiaries of the medicines are suffering from delivery difficulties. For example, more than DKK 42 billion will be invested in expanding production capacity in Kalundborg, Denmark. In this way, the aim is to be prepared, among other things, for an expansion of the product portfolio in the area of serious chronic diseases. Appropriately, this happens on the 100th anniversary of the company’s founding in Denmark.
Christoph Scherbaum Published/Updated: Recommendations: 2 Christian Geinitz, Roland Lindner, Vanessa Trzewik Published/Updated: , Recommendations: 29 Hanno Mußler Published/Updated: , Recommendations: 189
In view of the centenary celebrations, long-term investors are also looking at impressive share price gains in recent years. Anyone who invested 10,000 euros in Novo Nordisk shares a decade ago is now looking at a position worth more than 68,000 euros. The hype surrounding “weight loss injections” makes it very likely that this price development will not subside in the future.
#curse #blessing #weight #loss #injections