Strong Organic Growth Drives First Quarter Beat For Novozymes; Guidance Upgraded

Wide-moat Novozymes reported first-quarter EBIT of DKK 1.1 billion on organic sales growth of 10%. EBIT was around 4% above the company-compiled consensus while organic growth was 3.3 percentage points higher. Shares rose around 2.5% on the day while most peers were down. With the strong start, Novozymes upgraded its 2022 organic growth guidance to 4%-8% from 3%-7% previously, while EBIT margin guidance was maintained at 25%-26%. We were forecasting 5.7% organic growth and a 26% EBIT margin going into the quarter so we don’t expect to make a material change to our DKK 375 fair value estimate. At current levels, the shares look overvalued.