What happened
Shares of diabetes giant Novo Nordisk (NVO -1.39%) 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.
So what
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.
Image source: Getty Images.
Now what
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.
