Wednesday, May 9, 2018

Lundbeck Thriving On Cost Control

Kåre Schultz left H. Lundbeck A/S (OTCPK:HLUYY) (LUN.CO) to take over as CEO of Teva (TEVA) in the fall of 2017, but the man's legacy as CEO continues to drive strong profit growth at this Danish drugmaker. While Lundbeck continues to benefit from surprisingly strong sales of its older drugs and is seeing good growth in its new generation, the corporate restructuring carried out by Schultz has led to significant margin leverage that continues to drive better than expected profit growth.

Between a surprising positive decision from the FDA on Trintellix labeling and this very strong quarter, the shares are up more than 15% over the last month and up more than a quarter year-to-date. As the Street dials in the latest positive cost guidance, I believe quarterly beats of similar magnitude are going to get harder and harder to achieve. What's more, Lundbeck's pipeline is unlikely to provide much positive news in the short term, so I have some concerns as to what can/will continue to push these shares even higher.

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Lundbeck Thriving On Cost Control

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