Novo Nordisk (NYSE:NVO) remains a 'buy' for US bank Citigroup even though it is only the second European company in history to pass the half-a-trillion mark after LVMH temporarily hit the landmark last year.
The Danish pharma accompanied its annual report with a management call that reiterated scaling up production of its blockbuster diabetes drugs Wegovy and Ozempic remains its number one priority.
Capex will almost double to 45 billion Danish krone (DKK) in 2024 (15-17% of sales) with Novo expecting to post up to 25% revenue growth after 36% growth in 2023.
Around five million patients were added to Novo products in 2023, with a similar number expected this year, Citi noted.
Supply of lower Wegovy doses will more than double going forward with a gradual improvement across all doses expected through 2024.
Citi also highlighted that the US gross-to-net rebates across the portfolio increased to 81%, versus 75% in 2022 while return on invested capital (ROIC) rose to 88% from 74% a year earlier.
“Novo is offering revenue growth and ROIC outlooks that are more than 3-4 times higher than the sector, making the 60% PE premium on 2025 like-for-like earnings entirely justified in our view. “
'Buy' with a price target of DKK815 against DKK784.20 today, is Citi's rating.