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Novartis (NVS) Tops Q3 Earnings, Ups Operating Income View
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Swiss pharma giant Novartis AG (NVS - Free Report) reported strong sales from key drugs in third-quarter 2023 and raised its guidance for core operating income. Core earnings (excluding one-time charges) of $1.74 per share beat the Zacks Consensus Estimate of $1.70. The figure was also up from $1.40 a year ago.
Revenues of $11.8 billion climbed 12% from the year-ago quarter. On a constant currency basis, sales improved 12% as well driven by momentum in Entresto, Kesimpta, Kisqali, Scemblix and the strong uptake of radioligand therapy, Pluvicto.
Shares of Novartis have gained 4.4% year to date compared with the industry’s growth of 4.2%.
Image Source: Zacks Investment Research
Earlier in the month, Novartis completed the spin-off of its generic and biosimilar unit, Sandoz, following which Sandoz became an independent company.
Quarter in Detail
All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
With the successful spin-off of the Sandoz business, Novartis operates as a single global operating segment, being a focused, innovative medicines company. It is now concentrating on four core therapeutic areas (cardiovascular, renal and metabolic; immunology; neuroscience and oncology).
Entresto’s sales gained 31% from the year-ago quarter to $1.48 billion due to sustained, robust demand-led growth boosted by adopting guideline-directed medical therapy across regions. Yet, Entresto’s sales missed the Zacks Consensus Estimate of $1.53 billion and our estimate of $1.5 billion.
Kesimpta (multiple sclerosis) sales came in at $657 million, surging 124% on increased demand and strong access, and benefiting from a one-time revenue deduction adjustment in Europe. Sales beat both the Zacks Consensus Estimate and our estimate of $531 million.
Kisqali’s stellar performance continued, with sales soaring 76% to $562 million. The figure outshined the Zacks Consensus Estimate of $530 million and grew strongly across all regions on the back of increasing recognition of consistent overall survival and quality of life benefits. Kisqali sales also beat our estimate of $528.6 million.
Cosentyx’s sales improved by 4% to $1.3 billion, given the continued demand growth across key regions partly offset by US revenue deduction fluctuations across periods. Sales surpassed the Zacks Consensus Estimate of $1.3 billion and our estimate of $1.29 billion.
Strong performances by Jakavi (up 9% to $427 million), Promacta/Revolade (up 10% to $576 million) and Tafinlar + Mekinist (up 8% to $482 million) also boosted the top line.
Pluvicto raked in sales of $256 million on the back of a solid launch in the United States. Novartis received approval for Pluvicto's expanded manufacturing capacity in the second quarter at Millburn, NJ, and demand picked up.
Xolair sales grew 13% year over year to $369 million. Novartis has a collaboration agreement with Roche (RHHBY - Free Report) for Xolair. Novartis and Roche co-promote Xolair in the United States.
Scemblix generated sales of $106 million driven by sales growth across all regions.
However, generic competition affected sales, mainly for Gleevec/Glivec (down 19% to $144 million) and Gilenya (declined 47% to $270 million). Also, Lucentis’ sales plunged 20% to $363 million.
The results of the Sandoz division and selected portions of corporate activities attributable to Sandoz business are reported discontinued operations in the third quarter. Discontinued operations net sales were $2.5 billion, up 6% mainly driven by growth outside the United States.
Novartis now expects net sales for 2023 to grow in high-single digits.
Core operating income is now projected to grow in mid-to-high teens (previous guidance: low-double digits to mid-teens).
Key Updates
Novartis has appealed to reverse the negative decision of US District Court and to uphold the validity of its combination patent covering Entresto and other combinations of sacubitril and valsartan, which expires in 2025 (with pediatric exclusivity). No generics have tentative or final approval in the United States so far.
Our Take
Novartis’ better-than-expected third-quarter results were driven by strong performance of Kesimpta, Entresto, Kisqali and Pluvicto. Both Scemblix and Pluvicto saw very strong launches and the Leqvio launch continues to progress.
Zacks Rank
Novartis currently carries a Zacks Rank #3 (Hold).
Estimate for Dynavax for 2023 has narrowed to a loss of 22 cents per share from a loss of 51 cents in the past 90 days. Earnings estimate for 2024 is pinned at 8 cents per share in the same time frame.
Estimate for Acadia for 2023 have narrowed to a loss of 37 cents per share from a loss of 41 cents in the past 60 days. Earnings estimate for 2024 is pegged at 68 cents per share in the same time frame. The stock has improved 39.9% year to date.
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Novartis (NVS) Tops Q3 Earnings, Ups Operating Income View
Swiss pharma giant Novartis AG (NVS - Free Report) reported strong sales from key drugs in third-quarter 2023 and raised its guidance for core operating income. Core earnings (excluding one-time charges) of $1.74 per share beat the Zacks Consensus Estimate of $1.70. The figure was also up from $1.40 a year ago.
Revenues of $11.8 billion climbed 12% from the year-ago quarter. On a constant currency basis, sales improved 12% as well driven by momentum in Entresto, Kesimpta, Kisqali, Scemblix and the strong uptake of radioligand therapy, Pluvicto.
Shares of Novartis have gained 4.4% year to date compared with the industry’s growth of 4.2%.
Image Source: Zacks Investment Research
Earlier in the month, Novartis completed the spin-off of its generic and biosimilar unit, Sandoz, following which Sandoz became an independent company.
Quarter in Detail
All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
With the successful spin-off of the Sandoz business, Novartis operates as a single global operating segment, being a focused, innovative medicines company. It is now concentrating on four core therapeutic areas (cardiovascular, renal and metabolic; immunology; neuroscience and oncology).
Entresto’s sales gained 31% from the year-ago quarter to $1.48 billion due to sustained, robust demand-led growth boosted by adopting guideline-directed medical therapy across regions. Yet, Entresto’s sales missed the Zacks Consensus Estimate of $1.53 billion and our estimate of $1.5 billion.
Kesimpta (multiple sclerosis) sales came in at $657 million, surging 124% on increased demand and strong access, and benefiting from a one-time revenue deduction adjustment in Europe. Sales beat both the Zacks Consensus Estimate and our estimate of $531 million.
Kisqali’s stellar performance continued, with sales soaring 76% to $562 million. The figure outshined the Zacks Consensus Estimate of $530 million and grew strongly across all regions on the back of increasing recognition of consistent overall survival and quality of life benefits. Kisqali sales also beat our estimate of $528.6 million.
Cosentyx’s sales improved by 4% to $1.3 billion, given the continued demand growth across key regions partly offset by US revenue deduction fluctuations across periods. Sales surpassed the Zacks Consensus Estimate of $1.3 billion and our estimate of $1.29 billion.
Strong performances by Jakavi (up 9% to $427 million), Promacta/Revolade (up 10% to $576 million) and Tafinlar + Mekinist (up 8% to $482 million) also boosted the top line.
Pluvicto raked in sales of $256 million on the back of a solid launch in the United States. Novartis received approval for Pluvicto's expanded manufacturing capacity in the second quarter at Millburn, NJ, and demand picked up.
Xolair sales grew 13% year over year to $369 million. Novartis has a collaboration agreement with Roche (RHHBY - Free Report) for Xolair. Novartis and Roche co-promote Xolair in the United States.
Scemblix generated sales of $106 million driven by sales growth across all regions.
However, generic competition affected sales, mainly for Gleevec/Glivec (down 19% to $144 million) and Gilenya (declined 47% to $270 million). Also, Lucentis’ sales plunged 20% to $363 million.
The results of the Sandoz division and selected portions of corporate activities attributable to Sandoz business are reported discontinued operations in the third quarter. Discontinued operations net sales were $2.5 billion, up 6% mainly driven by growth outside the United States.
Novartis AG Price, Consensus and EPS Surprise
Novartis AG price-consensus-eps-surprise-chart | Novartis AG Quote
2023 Guidance
Novartis now expects net sales for 2023 to grow in high-single digits.
Core operating income is now projected to grow in mid-to-high teens (previous guidance: low-double digits to mid-teens).
Key Updates
Novartis has appealed to reverse the negative decision of US District Court and to uphold the validity of its combination patent covering Entresto and other combinations of sacubitril and valsartan, which expires in 2025 (with pediatric exclusivity). No generics have tentative or final approval in the United States so far.
Our Take
Novartis’ better-than-expected third-quarter results were driven by strong performance of Kesimpta, Entresto, Kisqali and Pluvicto. Both Scemblix and Pluvicto saw very strong launches and the Leqvio launch continues to progress.
Zacks Rank
Novartis currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A couple of better-ranked stocks in the healthcare industry are Dynavax Technologies (DVAX - Free Report) and Acadia Pharmaceuticals (ACAD - Free Report) . While DVAX currently sports a Zacks Rank #1 (Strong Buy), ACAD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimate for Dynavax for 2023 has narrowed to a loss of 22 cents per share from a loss of 51 cents in the past 90 days. Earnings estimate for 2024 is pinned at 8 cents per share in the same time frame.
Estimate for Acadia for 2023 have narrowed to a loss of 37 cents per share from a loss of 41 cents in the past 60 days. Earnings estimate for 2024 is pegged at 68 cents per share in the same time frame. The stock has improved 39.9% year to date.