Daiichi Sankyo Earnings: Results Beat on Strong Enhertu Sales, but Timing for Key Readouts Delayed

Narrow-moat Daiichi Sankyo reported strong first-quarter results, mostly due to better-than-expected sales in the U.S. of its flagship drug Enhertu. Operating profit margins were in line with expectations. However, the expected top-line readout for Destiny-Breast06, or DB06, has been delayed to the second half of fiscal 2023. We lower our fair value estimate to JPY 5,100 per share from JPY 5,200 to reflect small adjustments to our forecasts for Dato-DXd and Enhertu. We think the stock is attractive at current levels.