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PREVIEW-Denmark's Novo seen reinforcing growth plans - analysts

A view shows kettles at an insulin production line in Novo Nordisk's plant in Kalundborg November 4, 2013. REUTERS/Fabian Bimmer
A view shows kettles at an insulin production line in Novo Nordisk's plant in Kalundborg November 4, 2013. REUTERS/Fabian Bimmer

By Shida Chayesteh

COPENHAGEN (Reuters) - Denmark's Novo Nordisk, the world's biggest insulin producer, will on Tuesday seek to reassure investors that its outlook is intact, analysts said ahead of the company's capital markets day (CMD).

"We expect it will act as a strong confidence booster for Novo's future growth prospects," Nordea analyst Michael Novod wrote in a note to clients, adding that he didn't expect major new announcements.

Analysts generally expect Novo Nordisk to reiterate its 2014 guidance and its long-term financial targets of 15 percent annual growth in operating earnings, a 40 percent operating margin and a cash conversion of 90 percent.

After two decades of outperforming its pharmaceutical industry rivals, shares in Novo have stalled this year following setbacks for a new long-acting insulin, Tresiba, and worries over the prices its products can command.

Novo shares have risen only 6.9 percent in 2013 compared to a 28.7 percent surge in Copenhagen's benchmark index, and the stock's premium compared to peers is now at its lowest in more than six years, Nordea said.

Alm. Brand Markets doubted however that investors will change their minds soon.

"There is a risk that the diabetes market is moving towards more price sensitivity," the brokerage said, adding that new products currently are not strong enough to command premium prices.

But in the next four to five years, Novo's potential pipeline includes long-acting insulin Tresiba, obesity drug Liraglutide and combination drugs that would further improve the treatment of diabetics.

"We expect Novo to provide more clarity on the strategy for Liraglutide in obesity, formulary considerations, competitive positioning, patient target groups ... we still see Liraglutide in obesity as a completely under appreciated asset in the pipeline with very low market expectations," Nordea analyst Michael Novod said.

With obesity being treated as a disease, and as more U.S. insurers offer coverage, such drugs may also find their way on to Medicare reimbursement lists, he said.

(Editing by Terje Solsvik)

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