Takeda Earnings: Top Line Buoyed by Foreign Exchange, Orexin Program Back in Focus

Narrow-moat Takeda’s first-quarter earnings were in line with our estimates on a constant-currency basis. Revenue was JPY 1,057 billion, which is 9% year-on-year growth but only 3.7% on a constant-currency basis. Core operating profit margin was 30.8% of revenue, or 2 percentage points worse than the same period last year. We think the company is on track to meet or perhaps exceed its full-year guidance of JPY 3.84 trillion in revenue and JPY 1 trillion in core operating profit. However, while earnings upside is possible, we think Takeda is fairly valued presently.