(Bloomberg) — Runaway demand for Novo Nordisk A/S’s diabetes and weight-loss drugs has propelled the Danish drugmaker into a class all its own atop Europe’s pharmaceutical sector — and the Stoxx Europe 600 Index — so achieving its 2023 targets should be a shoo-in when it reports next week.
Most Read from Bloomberg
More pressing will be how it expects to keep up with the rampant demand as it scales up production of the Ozempic and Wegovy blockbusters, and fends off competition from Eli Lilly & Co.’s Mounjaro and Zepbound.
European peers GSK Plc, Novartis AG, Roche Holding AG and Sanofi SA — also reporting next week — face more mixed fortunes. Health care is the only sector in the region expected to deliver fourth-quarter earnings growth, but that rests exclusively on Novo, without which results would likely be flat, according to Bloomberg Intelligence strategists Kaidi Meng and Laurent Douillet.
After double-digit gains over the past three quarters, earnings in Europe’s financial sector probably fell 1% in the three months ended Dec. 31, with increasing loss provisions weighing on banks, BI said. Deutsche Bank AG, Danske Bank A/S and Swiss wealth manager Julius Baer Group Ltd. should offer clues on the 2024 outlook as interest rate cuts beckon and economies slow.
The week will also see reports from Irish airline Ryanair Holdings Plc and British drinks company Diageo Plc.
Highlights to look out for:
Monday: Ryanair’s (RYA ID) load factor may have slipped in its fiscal third quarter as it cracked down on online travel agents and canceled flights due to the conflict in the Middle East. The removal of OTA bookings may impact yields into 2024, Goodbody and Citi analysts warned, while expressing confidence Ryanair can boost full-year adjusted net income more than one-third to €1.92 billion ($2.1 billion). Setbacks in Boeing Co.’s supply chain and Max 9 safety concerns may put Max 8 and future Max 10 deliveries at risk.
Tuesday: Diageo (DGE LN) must demonstrate customers are still buying premium products to keep its longer-term organic sales growth guidance of 5% to 7% intact, BI said. Estimates suggest slippage in first-half EPS and minimal growth for the year through June. The company has already warned of a challenging first half amid a slowdown in Latin America and the Caribbean. Increased brand investment and excess inventory management will be key to a recovery.
Wednesday: Novo Nordisk (NOVOB DC) typically takes a conservative view at the start of the year, but its outlook should still hand investors a point of reference on the additional capacity in obesity and diabetes care it’s targeting, BI said. Estimates for 2024 of 113 billion Danish kroner ($16.4 billion) and 60 billion kroner for Ozempic and Wegovy, respectively, are considered achievable, despite Lilly breathing down its neck. Label expansion for Wegovy, readouts on late stage tests with hemophilia candidate Mim8 and more data on Ozempic and diabetes drug Rybelsus may provide catalysts.
-
GSK (GSK LN) may beat fourth-quarter revenue and EPS expectations after upgrading its guidance in November, thanks to strong sales of shingles vaccine Shingrix and RSV vaccine Arexvy. UBS analysts note opportunities in the Chinese market and the possibility of bolt-on acquisitions, following this month’s $1.4 billion deal with asthma-focused firm Aiolos Bio Inc. A potential 2% hike in its global tax rate and the loss of royalties from HPV vaccine Gardasil may be stumbling blocks in 2024, BI said.
-
After increasing its outlook several times in 2023, Novartis (NOVN SW) may target mid-single-digit sales growth and a high-single-digit operating profit increase at constant currencies this year, according to BI. That would leave upside potential for stronger-than-expected sales from Pluvicto, Kesimpta, Kymriah and Lutathera, as well as cost improvements. Consensus calls for an 8.9% decline in sales to $11.6 billion and a 7.8% increase in core EPS to $1.64 in the fourth quarter.
Thursday: Deutsche Bank’s (DBK GY) headline FIC revenue number will be closely eyed after US peers posted steep declines. FIC revenue for the quarter should be up 9.1%, but 9.6% lower for the year, consensus shows. Watch for details on the bank’s next capital returns target, which needs to advance on the €450 million buyback announced in 2023, BI said. Despite its musings about M&A, regulatory hurdles mean management might focus on bolstering earnings and shareholder returns, analysts Alison Williams and Neil Sipes said.
-
Julius Baer (BAER SW) may reveal credit provisions of 400 million Swiss francs ($461 million) for 2023 from its exposure to Austrian real estate company Signa’s insolvency, ZKB analyst Michael Klien estimates. That probably pushed net income for the year far below 2022’s, although net new money inflow shouldn’t be affected too much. The wealth manager may benefit from monetary policy easing this year, Deutsche Bank said.
-
Roche’s (ROG SW) 2024 outlook should be more optimistic than last year’s as Covid headwinds recede, although an appreciating Swiss franc may be a drag in absolute terms, BI said. Investors will also be on the lookout for the timing of data from its late-stage portfolio, which Roche says analysts are underestimating. Vabysmo may be one of the few bright lights in fourth-quarter revenue that’s estimated to have fallen 8.4%.
-
Sanofi’s (SAN FP) report will be scrutinized for details on its plan to separate the Consumer Healthcare business and its outlook for 2025, according to BI. France’s biggest drugmaker has already signaled it will sacrifice margin to spend more on research and development this year. Any indication on timing of key late-stage data readouts is also of interest.
Friday: Danske Bank’s (DANSKE DC) net interest income probably rose about 25% in the quarter. While the measure is only expected to grow just over 5% this year, that would still be the highest among Nordic peers, BI said. Impairment charges should come to around 300 million kroner for 2023, but could balloon toward 2.3 billion kroner this year amid persisting uncertainty, BI analysts Mar’Yana Vartsaba and Philip Richards said.
–With assistance from Christopher Jungstedt, Valentine Baldassari, Laura Malsch, April Roach, Paula Doenecke, Allegra Catelli and James Cone.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.