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Novartis (NVS) Tops on Q1 Earnings & Revenues, Ups View
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Novartis AG (NVS - Free Report) reported strong first-quarter results for 2022. Core earnings (excluding one-time charges) of $1.71 per share beat the Zacks Consensus Estimate of $1.55 and our estimate of $1.60. The figure also rose from $1.46 reported in the year-ago quarter.
Revenues of $12.9 billion beat the Zacks Consensus Estimate of $12.5 billion and our estimate of $12.7 billion. Sales were also up 3% from the year-ago quarter. On a constant-currency basis, sales were up 8%, driven by momentum in Entresto, Kesimpta, Scemblix Kisqali and the strong uptake of radioligand therapy, Pluvicto.
Shares of Novartis have gained 11.2% in the past year compared with the industry’s growth of 11.1%.
Image Source: Zacks Investment Research
All growth rates mentioned below are on a year-over-year basis and at constant-exchange rates.
Quarter in Detail
Swiss pharma giant Novartis operates under two segments — Innovative Medicines and Sandoz (generics).
The Innovative Medicines division recorded sales of $10.6 billion, up 7% year over year, driven by the continued strong performance of Entresto, Pluvicto, Kesimpta and Kisqali, partly offset by generic competition mainly for Gilenya. Sales beat the Zacks Consensus Estimate of $10.2 billion and our estimate of $10.3 billion. Sales in the United States were $4.1 billion and from the rest of the world at $6.5 billion.
Entresto’s sales rose 32% from the year-ago quarter to $1.4 billion due to sustained, robust demand-led growth and increased patient share across all geographies. Entresto’s sales beat the Zacks Consensus Estimate and our estimate of $1.3 billion.
However, Cosentyx’s sales decreased 4% to $1.1 billion from the prior-year quarter as sales growth across key geographies was impacted by revenue deduction adjustments in the United States. Sales missed the Zacks Consensus Estimate and our estimate of $1.2 billion.
Kesimpta’s sales were $384 million, driven by increased demand. Strong performances by Kisqali (up 81% to $415 million), Jakavi (up 13% to $414 million), Promacta/Revolade (up 15% to $547 million) and Tafinlar + Mekinist (up 18% to $458 million) boosted the top line. Pluvicto raked in sales of $211 million on the back of a strong launch in the United States.
However, generic competition affected sales, mainly for Gleevec/Glivec (down 26% to $147 million) and Gilenya (down 62% to $232 million). Lucentis’ sales were also down 20% to $416 million.
Sales in the Sandoz division were $2.4 billion, up 8%, driven by Europe, which benefited from solid volume growth on continued momentum from the prior-year launches, and a strong cough and cold season. Sales beat our estimate of $2.3 billion. Global sales of Biopharmaceuticals grew by 17%.
Sandoz Update
The planned spin-off of the Sandoz unit remains on track for the second half of 2023. The transaction is expected to be tax-neutral for Novartis. Novartis had earlier announced that it planned to spin off Sandoz into a new publicly traded standalone company following a strategic review. Due to industry-wide price competition among generic pharmaceutical companies and the consolidation of buyers, Sandoz experienced significant declines in sales and profits, particularly in the United States.
2023 Guidance Raised
Novartis expects net sales for 2023 to grow in the mid-single digits (previous guidance: low- to mid-single digits) based on strong momentum in the first quarter. Sales of Innovative Medicines are projected to grow in the mid-single digits (previous guidance: low to mid-single digits) and Sandoz sales are also expected to grow in mid-single digits (previous guidance: low to mid-single digits).
Key Pipeline Updates
Tafinlar + Mekinist was approved in the United States for the treatment of pediatric patients with low-grade glioma with a BRAF V600E mutation who require systemic therapy.
Entresto received positive CHMP opinion for pediatric heart failure indication. If approved, this would support the extension of regulatory data protection in Europe to November 2026.
Novartis’ performance in the first quarter was better than expected, as earnings and sales beat estimates. With the planned spin-off of Sandoz, Novartis is looking to become a pure-play pharmaceutical company. Drugs like Entresto, Kesimpta, Zolgensma, Kisqali and Leqvio should continue to fuel growth and offset the impacts of generic competition. Pluvicto and Scemblix saw very strong launches. The Leqvio launch continues to progress.
Novartis currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the healthcare sector are Novo Nordisk (NVO - Free Report) and Sanofi (SNY - Free Report) . Novo Nordisk currently sports a Zacks Rank #1 (Strong Buy) and Sanofi carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, earnings estimates for NVO for 2023 have gained 6 cents to $4.52. NVO topped earnings estimates in of the last four quarters and missed in the remaining one, with a four-quarter earnings surprise of 3%, on average.
Over the past 60 days, earnings estimates for Sanofi have increased to $4.40 from $4.46 for 2023. SNY also surpassed estimates in three of the trailing four quarters and missing in the other name, the average surprise being 7.68%.
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Novartis (NVS) Tops on Q1 Earnings & Revenues, Ups View
Novartis AG (NVS - Free Report) reported strong first-quarter results for 2022. Core earnings (excluding one-time charges) of $1.71 per share beat the Zacks Consensus Estimate of $1.55 and our estimate of $1.60. The figure also rose from $1.46 reported in the year-ago quarter.
Revenues of $12.9 billion beat the Zacks Consensus Estimate of $12.5 billion and our estimate of $12.7 billion. Sales were also up 3% from the year-ago quarter. On a constant-currency basis, sales were up 8%, driven by momentum in Entresto, Kesimpta, Scemblix Kisqali and the strong uptake of radioligand therapy, Pluvicto.
Shares of Novartis have gained 11.2% in the past year compared with the industry’s growth of 11.1%.
Image Source: Zacks Investment Research
All growth rates mentioned below are on a year-over-year basis and at constant-exchange rates.
Quarter in Detail
Swiss pharma giant Novartis operates under two segments — Innovative Medicines and Sandoz (generics).
The Innovative Medicines division recorded sales of $10.6 billion, up 7% year over year, driven by the continued strong performance of Entresto, Pluvicto, Kesimpta and Kisqali, partly offset by generic competition mainly for Gilenya. Sales beat the Zacks Consensus Estimate of $10.2 billion and our estimate of $10.3 billion. Sales in the United States were $4.1 billion and from the rest of the world at $6.5 billion.
Entresto’s sales rose 32% from the year-ago quarter to $1.4 billion due to sustained, robust demand-led growth and increased patient share across all geographies. Entresto’s sales beat the Zacks Consensus Estimate and our estimate of $1.3 billion.
However, Cosentyx’s sales decreased 4% to $1.1 billion from the prior-year quarter as sales growth across key geographies was impacted by revenue deduction adjustments in the United States. Sales missed the Zacks Consensus Estimate and our estimate of $1.2 billion.
Kesimpta’s sales were $384 million, driven by increased demand. Strong performances by Kisqali (up 81% to $415 million), Jakavi (up 13% to $414 million), Promacta/Revolade (up 15% to $547 million) and Tafinlar + Mekinist (up 18% to $458 million) boosted the top line. Pluvicto raked in sales of $211 million on the back of a strong launch in the United States.
However, generic competition affected sales, mainly for Gleevec/Glivec (down 26% to $147 million) and Gilenya (down 62% to $232 million). Lucentis’ sales were also down 20% to $416 million.
Sales in the Sandoz division were $2.4 billion, up 8%, driven by Europe, which benefited from solid volume growth on continued momentum from the prior-year launches, and a strong cough and cold season. Sales beat our estimate of $2.3 billion. Global sales of Biopharmaceuticals grew by 17%.
Sandoz Update
The planned spin-off of the Sandoz unit remains on track for the second half of 2023. The transaction is expected to be tax-neutral for Novartis. Novartis had earlier announced that it planned to spin off Sandoz into a new publicly traded standalone company following a strategic review. Due to industry-wide price competition among generic pharmaceutical companies and the consolidation of buyers, Sandoz experienced significant declines in sales and profits, particularly in the United States.
2023 Guidance Raised
Novartis expects net sales for 2023 to grow in the mid-single digits (previous guidance: low- to mid-single digits) based on strong momentum in the first quarter. Sales of Innovative Medicines are projected to grow in the mid-single digits (previous guidance: low to mid-single digits) and Sandoz sales are also expected to grow in mid-single digits (previous guidance: low to mid-single digits).
Key Pipeline Updates
Tafinlar + Mekinist was approved in the United States for the treatment of pediatric patients with low-grade glioma with a BRAF V600E mutation who require systemic therapy.
Entresto received positive CHMP opinion for pediatric heart failure indication. If approved, this would support the extension of regulatory data protection in Europe to November 2026.
Novartis AG Price, Consensus and EPS Surprise
Novartis AG price-consensus-eps-surprise-chart | Novartis AG Quote
Our Take
Novartis’ performance in the first quarter was better than expected, as earnings and sales beat estimates. With the planned spin-off of Sandoz, Novartis is looking to become a pure-play pharmaceutical company. Drugs like Entresto, Kesimpta, Zolgensma, Kisqali and Leqvio should continue to fuel growth and offset the impacts of generic competition. Pluvicto and Scemblix saw very strong launches. The Leqvio launch continues to progress.
Novartis currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the healthcare sector are Novo Nordisk (NVO - Free Report) and Sanofi (SNY - Free Report) . Novo Nordisk currently sports a Zacks Rank #1 (Strong Buy) and Sanofi carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, earnings estimates for NVO for 2023 have gained 6 cents to $4.52. NVO topped earnings estimates in of the last four quarters and missed in the remaining one, with a four-quarter earnings surprise of 3%, on average.
Over the past 60 days, earnings estimates for Sanofi have increased to $4.40 from $4.46 for 2023. SNY also surpassed estimates in three of the trailing four quarters and missing in the other name, the average surprise being 7.68%.