Equities Update: Disney, DCC, GSK, Novo Nordisk…

DCC pushes on with restructuring

Adam Vettese, market analyst at investment platform eToro, says: “A solid if not uneventful update from sales and marketing firm DCC this morning which indicates profit will be in line with expectations. This is in spite of warmer weather conditions which impacted its Energy division which does the lion’s share of its business. The company will continue to focus on energy after Technology delivered weak performance over the festive period and Healthcare will be divested this year.

A strong Q4 and healthier outlook boosts GSK shares, despite political headwinds

Mark Crouch, market analyst at investment platform eToro, says: GSK’s latest earnings update brings some welcome relief for investors. After falling 20% since May, GlaxoSmithKline’s shares have struggled, weighed down by legal and political challenges that have lingered like a stubborn cold. However, following a better-than-expected fourth-quarter, Glaxo now projects sales to grow by up to 5% in 2025. Strength in its HIV and oncology portfolios has been a key driver, offsetting weaknesses in vaccine sales as GSK generated £3 billion in free cash flow.

“Recent political challenges have been a constant headache for Glaxo. President Trump’s proposed health secretary, Robert F. Kennedy Jr.—an ardent critic of vaccine mandates—has vowed to clamp down on big pharma, which he claims profits at the expense of Americans’ health. While the validity of his claims is debatable, the potentially negative impact of his appointment on GSK’s vaccine sales is much more tangible. However, with Glaxo shares currently trading near the bottom of a range that dates back to 2012, investors might be tempted at these levels. Moreover, with GSK announcing £2 billion in share buybacks, the company is starting to look like a much healthier proposition for investors.”

“Shares have traded mostly sideways for the last 12 months and so investors will be hoping that playing to its strengths can help propel DCC’s price back to the top of that range and beyond.”

Novo Nordisk: Strong 2024 results and 2025 guidance provide much-needed support

Jakob Westh Christensen, market analyst at eToro, says: “Novo Nordisk ended 2024 strongly with revenue of DKK 290 billion, surpassing the expected DKK 285 billion. Revenue has grown 25% this year alone and has doubled since 2021, whilst operating income reached DKK 128 billion, above the anticipated DKK 126 billion.

“Key drivers are GLP-1 blockbusters Ozempic and Wegovy. GLP-1 diabetes treatment now accounts for over 50% of sales, but it is the obesity drug Wegovy in particular that is attracting investors’ attention, with sales up 86%, now 20% of total revenue, easing concerns about slowing growth for Wegovy. Management’s 2025 guidance is also positive, forecasting 19-27% operating income growth due to strong demand for GLP-1 treatments.

“These strong results may renew interest in Novo Nordisk’s stock. Despite being one of the fastest-growing stocks in 2023 and early 2024, the stock has had a rough patch since the summer of 2024, with the price falling around 40%. However, this drop has made its valuation more attractive given the company’s strong growth and strategic position in an obesity market potentially worth USD 130 billion by 2030.

While quarterly results influence share prices, long-term R&D developments have the potential to significantly drive the share price, as seen with trial data for Wegovy’s next generation CagriSema in December and Amycretin in January. This could mean that the share price in 2025 will be driven more by the development of the obesity drugs in the R&D pipeline, with short-term earnings taking a secondary role. However today’s solid results could provide a much-needed tailwind for the stock.”

Disney delivers healthy profit, but streaming subscriber numbers a concern

Adam Vettese, analyst at investment platform eToro, says: “Overall this is a healthy-looking set of results for Walt Disney’s first quarter, but investors will likely have concerns about where Disney+ subscriber numbers are headed.

“Earnings were particularly strong, substantially exceeding estimates, and climbing more than 20% from the comparable period last year. The company’s entertainment segment continues to enjoy a healthy performance, with the billion-dollar global success of Moana 2 a notable driver of revenue that helped the studios achieve what CEO Bob Iger called ‘outstanding box office performance’. The experiences segment was less sparkling, where there was a decline in domestic operating income, partially on account of the unprecedentedly bad hurricane season, but this fall was offset by a large growth in profit internationally.

“The company has made further advances in its strategic shift from linear media networks to streaming, incorporating access to ESPN from Disney+, but the drop in international paid subscribers to Disney+ may be a small red flag for investors. The company’s guidance warned of a ‘modest decline’ in Disney+ subscribers in Q2 compared to Q1, creating the worry that if a back-to-back quarterly decline does materialise, it could be an indication of the start of a trend or at least the suggestion of a ceiling for where Disney can realistically go with price rises.”