Novo Stock- European Shares Rise on Earnings Surge; Novo Nordisk Sees Decline

Novo Stock– European shares experienced a strong rally on Wednesday, driven by a wave of positive corporate earnings reports that bolstered investor sentiment. The broad STOXX 600 index was up by 0.8% at 492.21 points as of 0830 GMT, inching closer to the crucial 500 mark. All major European markets were in the green, with most gaining nearly 1%. However, the healthcare sector lagged slightly, falling by 0.1%.

Novo Nordisk, a leading player in the healthcare sector, saw its shares fall by 3.4% after reporting a second-quarter operating profit that fell short of analysts’ expectations and lowering its annual profit forecast. This was a notable drag on the market, despite the overall positive trend.

In contrast, Roche’s shares climbed by 1.6% following news that the Swiss pharmaceutical giant is contemplating the sale of its cancer data specialist, Flatiron Health. This move is seen as a strategic shift that could benefit the company in the long run.

The day’s trading was marked by a focus on corporate earnings as investors shifted their attention away from earlier fears of a U.S. recession, which had previously triggered a global selloff in equities. Risky assets were higher as positioning is cleaner and dip buyers started to emerge, remarked Mohit Kumar, chief economist for Europe at Jefferies. The improved sentiment comes as markets adapt to the traditionally quieter August trading period, with lighter volumes and fewer major market drivers.

Chris Beauchamp, chief market analyst at IG Group, noted, It’s just a case where people don’t want to take too many big moves in what is traditionally a weaker period for stocks. Earnings are taking over a bit now… there’s not too many macro drivers and perhaps it’s a good thing at the moment.

On the economic data front, Germany saw a positive surprise as industrial orders for June came in stronger than anticipated, offering a glimmer of optimism for Europe’s largest economy. The German benchmark index DAX rose by 0.8% in response to this data.

Continental, a major car parts manufacturer, saw its shares soar by 4.7% after it exceeded expectations for its second-quarter results. Similarly, Just Eat Takeaway experienced a significant 7.2% increase after J.P. Morgan upgraded its stock rating to overweight from neutral.

However, not all news was positive. Puma, the German sportswear maker, saw its shares plunge nearly 13% after it narrowed its full-year core profit outlook, a move that disappointed investors.

Later in the day, market participants will be keenly watching for remarks from European Central Bank officials Olli Rehn and Elizabeth McCaul for insights into future monetary policy actions.

Additionally, Commerzbank, one of Germany’s prominent banks, saw its shares drop by 5.5% following a 5% decline in its second-quarter net profit. Beiersdorf, known for its Nivea brand, also faced a decline, with its shares slipping 2.7% despite reporting a 7.1% increase in organic sales for the first half of the year.

Novo Nordisk Stock Falls After Reporting Earnings Below Expectations and Cutting Profit Outlook

Novo Nordisk reported weaker-than-expected net profit for the second quarter on Wednesday and adjusted its operating profit forecast downward.

The pharmaceutical giant announced a net profit of 20.05 billion Danish kroner ($2.93 billion) for the three months ending in June. This figure fell short of the LSEG consensus estimate of 20.9 billion Danish kroner. Additionally, earnings before interest and tax (EBIT) were reported at 25.93 billion Danish kroner, missing the forecast of 26.86 billion Danish kroner.

Novo Nordisk also revised its operating profit outlook for the full year 2024, now projecting growth between 20% and 28%, down from the earlier expected range of 22% to 30%.

Shares of Novo Nordisk fell nearly 7% at one point in the trading session before recovering slightly, and were down 2.71% as of 9:40 a.m. London time.

In the first quarter of 2024, Novo Nordisk had reported a 28% increase in net profit to 25.4 billion Danish kroner year-over-year, which led to an increase in its sales and operating profit growth forecasts.

On Wednesday, the company further raised its sales growth expectations for the full year 2024, now guiding for 22% to 28% growth at constant exchange rates, compared to the previous forecast of 19% to 27%.

Sales of the popular weight loss drug Wegovy surged 55% in the second quarter of 2024 compared to the same period in 2023, reaching 11.66 billion kroner.

Novo Nordisk CEO Lars Fruergaard Jørgensen stated that the company anticipates attractive growth in the months ahead.

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