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www.barchart.com <\/p>\nSwitzerland-based global healthcare company Novartis (NVS) is gaining momentum this year, thanks to solid pipeline execution, new regulatory wins, high-value license transactions, capital return to shareholders, and positive market sentiment. Novartis stock has surged 36.3% year-to-date, outperforming the broader market.<\/p>\n
Following Sandoz\u2019s (SDZNY) 2023 spinoff, Novartis is a pure-play innovative medicines firm focused on high-value therapeutic areas.<\/p>\n
The company is scheduled to report its third-quarter earnings on Oct. 28. Let us see if the stock is a buy ahead of earnings.<\/p>\n
www.barchart.com <\/p>\n
Novartis\u2019 strategy of focusing on high-value, innovative medicines is paying off. Its priority brands rose 33%, excluding Entresto, indicating that the next generation of medicines is taking over driving growth. In the second quarter, net sales increased by 11% year-over-year, with core earnings per share rising by 24% to $2.42.<\/p>\n
During the earnings call,\u00a0CEO Vas Narasimhan cited the company\u2019s outstanding portfolio performance, notably its newer oncology, neurology, and cardiovascular products, as significant drivers of the strong quarter. The oncology drug Kisqali stood out as the quarter\u2019s star performer, climbing 64% and gaining total prescription (TRx) leadership in metastatic breast cancer. Narasimhan stated that Kisqali\u2019s trajectory indicates it will become a multibillion-dollar growth engine over the next decade.<\/p>\n
Additionally, Kesimpta, Novartis\u2019 self-administered B-cell treatment for multiple sclerosis (MS), increased 33% in the quarter. Pluvicto, for prostate cancer, returned to robust growth in the quarter, up 30%, following the approval of its new pre-tax indication in the U.S. Furthermore, the cholesterol-lowering drug Leqvio (inclisiran) saw 61% growth and is on track to exceed $1 billion in annual sales.<\/p>\n
The company\u2019s blockbuster heart failure drug Entresto has continued to grow steadily. Novartis confirmed its estimate for a loss of exclusivity (LoE) in the U.S.\u00a0by mid-2025, citing ongoing litigation with one generic contender. The product remains a significant global contributor, with half of revenues coming from Europe, China, and Japan, where patent rights last until 2026 and beyond. These regions are likely to continue to contribute considerable revenue throughout the decade.<\/p>\n
Story Continues <\/p>\n
Through disciplined capital allocation, Novartis repurchased $5.3 billion worth of shares in Q2 and announced a new $10 billion buyback program to be executed by the end of 2027.<\/p>\n
On Sept. 30, Novartis reported that the U.S.\u00a0FDA had authorized Rhapsido (remibrutinib) for chronic spontaneous urticaria (CSU), a skin allergy disorder that does not respond to traditional treatments. According to Reuters, the twice-daily pill is expected to cost $4,521 in the U.S. for 30 days.<\/p>\n
Prior to this, Reuters\u00a0reported\u00a0that Novartis and Monte Rosa Therapeutics (GLUE) had signed a licensing agreement worth up to $5.7 billion to explore therapies for immune-related disorders, marking their second collaboration in less than a year. The agreement gives Novartis exclusive rights to an unnamed drug discovery target, as well as the possibility to license two more early stage immunology products from Monte Rosa\u2019s portfolio.<\/p>\n
This agreement follows Novartis\u2019 $5.2 billion deal with China\u2019s\u00a0Argo Biopharmaceutical for experimental heart treatments earlier this month, showing the Swiss pharmaceutical giant\u2019s aggressive attempt to strengthen its innovation pipeline.<\/p>\n
Novartis\u2019 Q2 results showed a company transforming into a leaner, faster-growing, innovation-driven pharmaceutical leader. While Entresto\u2019s patent expires, the company\u2019s pipeline depth, operational discipline, and innovative execution position it well for the next phase of growth over the next decade.<\/p>\n
For the full year 2025, management expects high single-digit sales growth, with analysts estimating revenue growth of 9.4% and earnings growth of 15.3%. Revenue and earnings are predicted to grow by 2.7% and 3.9% in 2026, respectively. Novartis stock trades at a 14x premium to its expected earnings growth in 2026.<\/p>\n
In September, Goldman Sachs\u00a0analyst James Quigley downgraded\u00a0Novartis stock to a \u201cSell\u201d rating, citing rising headwinds that could impede the pharmaceutical company\u2019s growth trajectory. Quigley believes the company\u2019s valuation has become overinflated, particularly as it faces a significant loss of exclusivity (LoE) on key drugs, which could slow revenue growth after years of consistent high single-digit to low double-digit growth.<\/p>\n
The upcoming generic competition for Entresto, one of Novartis\u2019 best-selling products, is also expected to erode earnings growth. With a limited new pipeline over the next 12-18 months, market confidence may deteriorate further.<\/p>\n
Overall, Wall Street has a cautious stance on Novartis stock, rating it a \u201cHold.\u201d Of the 18 analysts covering the stock, four rate it a \u201cStrong Buy,\u201d 11 say it is a \u201cHold,\u201d and three rate it a \u201cStrong Sell.\u201d The stock has surpassed its average target price of $122.43, and its high price estimate of $140 implies an upside potential of 5.7% from current levels.<\/p>\n
www.barchart.com <\/p>\n
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally\u00a0published on Barchart.com<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"Switzerland-based global healthcare company Novartis (NVS) is gaining momentum this year, thanks to solid pipeline execution, new regulatory…\n","protected":false},"author":2,"featured_media":32839,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[127],"tags":[2125,3713,206,9827],"class_list":{"0":"post-32838","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-novartis","8":"tag-earnings-growth","9":"tag-entresto","10":"tag-novartis","11":"tag-vas-narasimhan"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/116237791617711535","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/32838","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=32838"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/32838\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/32839"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=32838"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=32838"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=32838"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}