Best stocks to invest in – Novartis (NVS) Posts Lower-Than-Expected Earnings in Q4



Best stocks to invest in

Novartis NVS has a strong presence in the healthcare market across the world. This Switzerland based company has a presence in the field of oncology, neuroscience, ophthalmology and generics.

However, like many of its peers, Novartis is facing generic competition and pricing pressure for some of the products in its pharmaceutical segment. Novartis’ blockbuster drug, Diovan lost exclusivity both in the U.S. and EU and entry of generics is impacting the top-line.

In this scenario, investor focus remains on new drug approvals, late-stage pipeline candidates and their commercial potential, apart from the usual top-and bottom-line numbers. Meanwhile, Novartis undertook a series of steps to reorganize its portfolio in 2014 in order to focus on its core businesses of pharmaceuticals, eye care and generics. The company sold its Animal Health Division. Novartis also acquired certain oncology products and pipeline compounds from GlaxoSmithKline GSK.

Novartis has a mixed track record. The company beat estimates thrice in the last four trailing quarters posting a positive average earnings surprise of 6.95%.

Currently, Novartis has a Zacks Rank #3(Hold), but that could definitely change following the company’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:


Earnings: Novartis missed on earnings in the fourth quarter of 2015. Our consensus called for EPS of $1.22, while the company reported EPS of $1.14.

Revenue: Novartis posted revenues of $12.5 billion falling short of our consensus estimate of $12.9 billion.

Key Stats: Currency movements negatively impacted sales by 10%. On the other hand, the strong performance of the pharmaceutical segment offset the weakness in the Alcon segment. The pharmaceuticals division posted strong growth as key drugs – Gilenya, Tasigna, Tafinlar/Mekinist, Jakavi, Revolade and Cosentyx continue to boost revenues. However, the top line was affected by generic competition for Diovan monotherapy and Exelon Patch. Generics are projected to impact sales by $3.2 billion in 2016 compared to $2.2 billion in 2015.

Check back later for our full write up on this Novartis earnings report later!

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