Equities Update: Disney, Novo Nordisk, Wetherspoons, Uber…

A magical quarter for Disney

Garry White, Chief Investment Commentator at Charles Stanley, comments: “It was a magical quarter for Disney, with the company posting solid quarterly earnings and management issuing a confident outlook. Full-year earnings-per-share guidance was raised, no doubt surprising a previously cautious Wall Street. Disney’s domestic theme parks, such as Disney World in Orlando, proved popular and its streaming service added a solid number of new subscribers, although growth is slowing. Both these areas had been a concern ahead of the figures.”

Novo Nordisk Q1-earnings: Lower expectations, but greater clarity

Jakob Westh Christensen, market analyst at eToro, says: “Today’s first-quarter results from Novo Nordisk were highly anticipated, with the markets expectant that they might mark the end of the share price declines seen since the start of the year. The quarterly figures came in broadly as expected, with the company reporting a 19% increase in sales to DKK 78.1 billion and a 22% rise in operating profit. The real test, however, was the company’s full-year guidance.

“For weeks, the market had rumoured that Novo Nordisk would be forced to revise its initially strong outlook. The company has faced growing headwinds from slower prescription growth for its blockbuster weight-loss drug Wegovy in the US, increasing competition from cheaper, non-patented alternatives, and a nearly 10% decline in the US dollar. These are significant drags when roughly 60% of revenue comes from the US.

“With today’s announcement, these factors are now reflected in Novo Nordisk’s more cautious outlook. The company expects sales growth of 13–21%, down from the original 16–24%, with a similar downgrade to operating profit. While downgrades are rarely good news, this one is unlikely to shake investors. The numbers still represent solid growth for a company that, after the recent stock price declines, is no longer valued as a growth company.

“For investors accustomed to years of outperformance and upward guidance revisions, a downgrade is naturally unwelcome. But with expectations now reset and guidance more in line with market realities, the added clarity may be just what Novo Nordisk needs.”

Wetherspoons proving there is still life in the UK pub industry 

Mark Crouch, market analyst for eToro says: “Wetherspoons is proving there’s still life in the UK pub industry after reporting a 5.6% rise in like-for-like sales for the quarter. While modest, the increase comes as the British pub chain contends with falling footfall and rising input costs. As if Wetherspoons didn’t have enough on its plate, the business now faces higher National Insurance contributions and a rise in the National Living Wage.

“Wetherspoons’ competitive pricing, helped along by favourable spring weather, has kept punters coming through the doors, with many opting for value over pricier alternatives. However, this advantage exposes a fine line between advantage and weakness as Wetherspoons margins become vulnerable.

“Overall, the last few weeks have added some fizz to Wetherspoons’ share price, which has surged more than 25%. Investors appear to have decided the recent selloff, dragging shares to a two-year low, was well overcooked. This morning’s trading update seems to vindicate that view, with punters and investors alike clearly not losing their appetite for Wetherspoons.”

Uber slips on revenue miss despite earnings beat

Adam Vettese, market analyst for eToro says: “It may seem a bit harsh that shares have fallen 4% in pre-market trading despite earnings per share crushing expectations. However, the miss on revenue as well as less-than-ambitious forecasts might indicate concern over macroeconomic conditions or pressure from competitors. There are also other pressures in the form of a US Federal trade commission lawsuit as well as regulatory scrutiny regarding whether Uber drivers are classed as employees. Uber is a cash flow machine, but the soft guidance could indicate that growth may be decelerating.

“Shares recently hit an all-time high but have since pulled back, and as such this may be a time for profit taking for those investors worried about the slowing growth trajectory. In the longer term, with potential advances in driverless technology, Uber is definitely looking to the future, but investors will want to see the momentum sustained.”