ALK-Abello (CPH: ALK-B) shares are down considerably on the day following the results announcement. One of the joys of the results is that as there was a spate of respiratory infections therefore their tablet sales - for respiratory problems - were down. Which is amusing but then their tablets are for a different set of respiratory problems than infectious ones. The more specific problem is that sales were a little below expectations - that will drop a share price. Don't forget, the current price of any asset is determined by the beliefs of everyone in the market. So, if there's an average belief about sales, or profits, or EBITDA, or anything in fact, then underperforming against that belief will drop the price. As, of course, is also true of outperforming.
Another way to make much the same point is that new information changes prices by changing beliefs about what those prices should be. It's always relative to previous beliefs that matters.
ALK-Abello share price from Google.
The results themselves don't look too bad. Sales up 7% and operating margin steady at 18%, there are a lot of companies that would like that. True, the German business suffered a bit as a result of a mandated increase in the discount that had to be offered.
What has hit the stock is that a substantial part of the business is tablets for those respiratory problems. But they are for allergy problems - so, when there are respiratory infections rolling around the Northern European business slows down. In turn that has meant that the growth of that allergy tablet business - seen as the growth engine of the company - is likely to be down into the 9-14% range, instead of the earlier thought likely 15%.
As above, that's just how it works. There's nothing wrong with these results, it's just that they're not quite as good as people were expecting them to be. It's beliefs that matter that is - and when those beliefs are missed then prices change. Thus the 20% and change fall in ALK-B stock. Not because of anything wrong, just because of not quite as good as thought.