Shares of diabetes giant Novo Nordisk (NYSE:NVO) rose 10.6% in May according to data from S&P Global Market Intelligence. Investors can credit the gain to a well-received first-quarter earnings report.
Here's a review of the key results from the earnings release:
- Revenue grew 5% to 28.5 billion Danish kroner (DKK). The gains were driven by a 25% increase in sales of Victoza, 170% growth in its three new insulins, and 122% growth in its obesity drug Saxenda. However, sales of its legacy insulins only grew by 3% while its growth disorder and hemophilia drugs both declined.
- Income from operations rose 10% to 13.5 billion DKK.
- Earnings per share increased 9% to 4.06 DKK.
As a reminder, Novo had previously stated that pricing pressure in the U.S. was impacting the company's ability to grow. In response, management dropped its long-term profit growth target from 10% to 5%. While that news didn't sit well with investors, it appears to have lowered the company's hurdle rate enough to allow management to exceed expectations.
Novo's stock has now bounced back sharply from its lows earlier this year.
Given the company's beaten down share price, well-covered dividend, and the growing prevalence of diabetes, that strong recovery certainly makes sense to this Fool.
Looking ahead, Novo appears to have a good shot at continuing its recent growth trend as new products like Tresiba, Victoza, and Ryzodeg continue to take hold. If true, then I could easily see the company's long-term growth story continue to win over investors.