Novo, Stellantis Eye Gains in EMEA Amid Market Tests

Key Takeaway

• Novo Nordisk's Q1 report is highly anticipated, with Wegovy sales expected to more than double, amidst high market expectations.
• Stellantis shows resilience in Europe's EV market despite challenges from Chinese automakers and overall sales declines.
• Shell Plc anticipates a rebound in energy prices, focusing on strong oil and gas trading to offset refining margin weaknesses.

European Market Outlook

As Europe's most valuable company, Novo Nordisk A/S is under significant scrutiny with its upcoming first-quarter report, according to Bloomberg Intelligence’s Michael Shah. The Danish pharmaceutical giant, known for its weight-loss and diabetes medications, is at the forefront of a week filled with crucial earnings reports across various sectors. This period will also reveal how European automakers are coping with increased competition from Chinese firms such as BYD Co., Nio Inc., and Li Auto Inc., which are expanding their market share both domestically and in Europe.

GSK Plc, another major player in the pharmaceutical industry, is facing challenges with its leading products amid the potential emergence of new competitors. The automotive sector, represented by companies like Mercedes-Benz Group AG, Volkswagen AG, and Stellantis NV, is navigating a "rut" in sales growth, further complicated by the rising presence of Chinese carmakers on their home ground.

Key Earnings Highlights

The earnings season brings a diverse set of companies into focus, from Shell Plc in the energy sector to Vivendi SE in media, and Intesa Sanpaolo SpA in banking. Each company faces unique challenges and opportunities. For instance, Shell Plc's investors are likely to overlook a weaker first quarter in anticipation of a rebound in energy prices. Meanwhile, Vivendi is contemplating a significant restructuring that could see its major units, Canal+ and Havas, become independently listed entities.

The automotive sector is bracing for mixed results, with Stellantis expected to show resilience in Europe's electric vehicle market despite overall sales declines. Mercedes-Benz is grappling with supply constraints that have led to a drop in luxury vehicle sales, while Volkswagen is striving to revitalize its business in China amidst stiff competition from local manufacturers like BYD.

Pharmaceutical and Energy Sectors in Focus

Novo Nordisk is anticipated to report a significant increase in sales for its weight-loss drug Wegovy, with expectations of more than doubling the previous year's figures. This optimism is tempered by the high market expectations embedded in the company's stock price, leaving little margin for error. GSK, on the other hand, is expected to maintain its full-year goals, supported by sales of its vaccines, despite looming competition in the RSV market.

Shell's adjusted net income is projected to benefit from strong oil and gas trading, which could help counterbalance weaknesses in downstream refining margins. The company's strategic adjustments to its carbon-emissions reduction pace reflect a pragmatic approach to current market demands, with continued focus on shareholder returns through buybacks.

Street Views

• Michael Shah, Bloomberg Intelligence (Neutral on Novo Nordisk):

  "Novo Nordisk A/S’s reign as Europe’s most valuable company 'leaves no room to disappoint' with its first-quarter report."

• John Murphy and Sam Fazeli, Bloomberg Intelligence (Neutral on GSK):

  "Sales of shingles vaccine Shingrix and RSV shot Arexvy should help GSK meet its full-year goals. A guidance upgrade isn’t in the cards, as the threat of Moderna Inc. entering the RSV market looms... While reduced costs should boost the operating margin sequentially, it may not be enough to prevent a slight year-on-year dip."

• Will Hares, Bloomberg Intelligence (Bullish on Shell):

  "Adjusted net income consensus of $6.3 billion for Shell looks a little light after the company pointed to 'significantly higher' oil trading and still strong gas trading in an April 5 update... Both should help offset further weakness in downstream refining margins. Shell's decision in March to slow the pace of carbon-emissions cuts was 'prudent,' given the resilient demand backdrop."