Novartis stock outlook looks extremely positive. Novartis (NOVN.S) on Tuesday raised its full-year earnings forecast for the second time on strong drug sales. Swiss Drugmaker Novartis AG raised its profit outlook and announced plans to buyback of shares amounting to $15 billion as it prepares to spin off its Sandoz generics unit.
Novartis’s operating profit excluding some items will likely grow by low double digits this year. In a statement Novartis raised it stock outlook for a second time from a prior estimate of high single-digits gains. The stock rose as much as 4% in Zurich trading.
Sandoz Spinoff
All of Sandoz will get spun off, Novartis said on Tuesday. The stock will trade on the Swiss exchange, with an American Depositary Receipt program in the US.
Novartis has worked on severing itself from Sandoz for almost a year to hone its focus on more lucrative innovative medicines. The spinoff will take place in the fourth quarter if shareholders endorse it at a meeting on Sep 15, the company said.
Novartis setbacks
The Swiss drugmaker Novartis is in flux as Chief Executive Officer Vas Narasimhan sheds its less profitable projects and divisions to boost growth. The CEO has wrestled with research setbacks even as he reorganized the drugmaker and slashed jobs.
Clinical trial and patent
After seeing Novartis deliver strong results from breast cancer drug Kisqali in a clinical trial, investors are now turning their focus to the company’s operating performance, Barclays Plc analyst Emily Field wrote in a note.
Meanwhile, potential generic competitors are on the horizon for Novartis’s biggest drug, heart medicine Entresto. A US judge ruled patent invalid this month, but the drug probably won’t face generic competition before mid-2025, Chief Financial Officer Harry Kirsch said in a conference call with reporters.
As per Bloomberg, looking at Novartis stock outlook Pharma was the key driver of the beat, with all major franchises exceeding expectations and a 2Q pharma core operating margin of 39%, despite management suggesting that the 38.7% reported in first quarter was unlikely to be repeated.
Novartis buyback of shares
Initiating up to $15 billion buyback of shares to be completed by year-end 2025, following completion of previously announced share buyback in June 2023.
During the first half of 2023, Novartis’s buyback of shares a total of 61.3 million shares for USD 5.8 billion. These Novartis buyback of shares included 52.8 million shares under the USD 15 billion share buyback announced in December 2021 and completed in June 2023 with a total of 170.7 million buyback of shares over this period.
DTx Pharma Inc.
Novartis on Monday agreed to pay as much as $1 billion for the closely held biotech DTx Pharma Inc., which is developing treatments for nervous system disorders, focusing on a protein that can cause the sheath that supports and insulates nerves to malfunction.
The company is still looking for strategic and bolt-on opportunities for acquisitions, according to Kirsch. Such deals are rare, he said, and the drugmaker finds it difficult to find a good fit.
Novartis stock outlook -earning
Sales growth was boosted by “strong first half momentum” and the performance of drugs including heart failure drug Entresto and prostate cancer treatment Pluvicto.
In the second quarter, Novartis posted earnings per share (EPS) of $1.83, and revenue of $13.62 billion, both better than analysts’ forecasts.
With Tuesday’s advance, ADRs of Novartis have gained more than one-third of their value since their lows of September 2022.
