Novo delivered a stronger-than-expected second quarter at the sales and adjusted operating-profit level, while upgrading FY26 guidance for the second time this year. However, the shares fell ~6% due to weaker margins, elevated R&D charges and Wegovy pill sales that only just met expectations.
Key results versus consensus:
- Revenue of DKK78.5 billion, around 10% ahead of DKK71.6 billion expected.
- Adjusted EBIT of DKK33.4 billion, around 16% ahead of DKK28.9 billion expected.
- EBITDA of DKK37.4 billion, around 13% ahead of DKK33.2 billion expected.
- Statutory net income of DKK27.4 billion, around 25% ahead of DKK21.9 billion expected.
- Adjusted net income of DKK21.0 billion, around 4% below DKK21.9 billion expected.
- Pre-tax profit of DKK26.9 billion, around 5% below DKK28.4 billion expected.
- Gross margin of 78.2%, around 270 basis points below the 80.9% expected.
- Wegovy pill sales of DKK3.22 billion, in line with consensus.
- Ozempic sales of DKK31.4 billion.
Novo upgraded its FY26 constant-currency sales and operating-profit outlook to a range of -6% to flat, compared with the previous range of -12% to -4%. The improvement was largely anticipated, and probably a little underwhelming TBH, with the midpoint implying only modest upside to current market expectations.
The quality of the headline beat was also mixed. Sales benefited from favourable rebate adjustments for Ozempic, while operating expenses were affected by elevated R&D charges and impairments, including costs associated with monlunabant. This explains why statutory earnings looked strong while adjusted net income and pre-tax profit fell short of consensus.
MM’s view: The result was better than the share-price reaction suggests, but it was messy. Revenue and adjusted EBIT were comfortably ahead, and the upgraded outlook is encouraging, yet the gross-margin miss and softer adjusted earnings reduce the quality of the beat. We wanted more from the Wegovy pill following its strong launch. We continue to own Novo, but the company now needs to demonstrate that strong GLP-1 demand can translate into cleaner earnings growth, better margins and improved competitive positioning against Eli Lilly.
