Novartis Beats And Raises Q2 Results, Plans $15 Billion Buyback

(CTN News) – On Tuesday, Novartis AG (SIX:NOVN) (NYSE:NVS) reported stronger-than-expected Q2 results, causing its Swiss-listed shares to rise over 4% in value.

According to the company’s report, earnings per share were $1.83 on revenue of $13.62 billion, which was higher than the consensus that was expecting a profit of $1.71 per share on sales of $13.51 billion based on earnings per share of $1.71.

The company reported a 9% increase in revenue over the previous year.

It was a strong quarter for Novartis, with sales rising by a strong percentage and margins expanding strongly, supporting the company’s upgrade of its 2023 guidance.

It is important to note that the performance of the company was broad based across all key therapeutic areas and geographies.

As a result of the upcoming milestones for Kisqali, Pluvicto, and iptacopan, we are confident of our mid-term growth prospects, which is highlighted by the upcoming milestones for our growth drivers, the company’s CEO, Vas Narasimhan:

It is now expected that the company will be able to grow revenue at a high-single-digit rate for the full year, an upgrade from its previous forecast of a mid-single-digit rate growth for the full year.

As part of the announcement, Novartis also announced that its Board of Directors has approved the purchase of $15 billion worth of shares.

A 100% spin-off of Sandoz was also endorsed by the Board as a means of separating Sandoz from the parent company.

For the second straight quarter, Stifel analysts reaffirmed their Buy rating on Novartis shares after the company surpassed quarterly consensus estimates for the second time in a row.

In addition to BofA analysts being bullish on Novartis, there are other analysts who are also bullish:

We believe the 24-27E EPS CAGR of 14% is >2x the cons 6% and the 27E “New Novartis” opinc is over 22% above the cons driven by Kisqali, Pluvicto, Kesimpta, Iptacopan, and Entresto (assume generic Nov 27E vs cons 25/26E).

Even if a generic Entresto launch occurs in 25E we predict a 11% CAGR in 24-27E earnings and a c15% advantage in 27E core EPS.

Taking a risk-adjusted approach, we predict that Kisqali might be $15bn in commercial sales (adjusted for risk); Pluvicto is likely to be $5bn, whereas Kesimpta is likely to be $5bn.

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