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Novartis (NVS) Q4 Earnings Miss on Higher Costs, Sales Lag
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Swiss pharma giant Novartis AG (NVS - Free Report) reported lower-than-expected results in the fourth quarter of 2023. Core earnings (excluding one-time charges) of $1.53 per share missed the Zacks Consensus Estimate of $1.64. Higher expenses pulled down the bottom line. The figure was, nevertheless, up from $1.39 recorded a year ago.
Revenues of $11.4 billion climbed 8% from the year-ago quarter's level. On a constant currency basis, sales increased 10%, driven by momentum in Entresto, Kesimpta, Kisqali, Cosentyx and Pluvicto. However, sales missed the Zacks Consensus Estimate of $11.7 billion.
Shares are trading down in the pre-market following the results.
Shares of Novartis have risen 2.8% in the past six months compared with the industry’s growth of 11%.
Image Source: Zacks Investment Research
In October 2023, Novartis completed the spin-off of its generic and biosimilar unit, Sandoz, following which the latter 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, a focused, innovative medicines company, operates as a single global operating segment. It is now concentrating on four core therapeutic areas (cardiovascular, renal and metabolic, immunology, and neuroscience and oncology).
Entresto’s sales rose 26% from the year-ago quarter's level to $1.63 billion due to sustained, robust demand-led growth on the back of increased patient share across all geographies. Entresto’s sales beat both the Zacks Consensus Estimate and our estimate of $1.62 billion.
Kesimpta (multiple sclerosis) sales came in at $641 million, up 73% on increased demand and strong access. Sales beat both the Zacks Consensus Estimate and our estimate of $611 million.
Kisqali’s stellar performance continued, with sales soaring 76% to $610 million. The figure beat the Zacks Consensus Estimate of $608 million and came in line with our estimate. Sales grew across all regions, based on increasing recognition of consistently reported overall survival in HR+/HER2- advanced breast cancer.
Cosentyx’s sales increased 21% to $1.30 billion, primarily benefiting from a lower prior-year base level. Sales missed the Zacks Consensus Estimate of $1.34 billion and our estimate of $1.33 billion.
Strong performances by Jakavi (up 14% to $444 million), Promacta/Revolade (up 4% to $563 million) and Tafinlar + Mekinist (up 7% to $486 million) also boosted the top line.
Pluvicto raked in sales of $273 million on the back of a solid launch in the United States. Novartis received approval for Pluvicto's expanded manufacturing capacity at Millburn, NJ and demand picked up. Novartis is now focused on initiating new patients. Sales, however, missed the Zacks Consensus Estimate of $336 million and our estimate of $333 million.
Zolgensma sales of $286 million were down 4% due to fewer incident patient treatments. Sales, missed the Zacks Consensus Estimate of $311 million and our estimate of $304 million.
Ilaris sales came in at $376 million, up 29% year over year as sales grew across all regions.
Xolair sales grew 16% year over year to $378 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 $125 million driven by its strong launch uptake, demonstrating the high unmet need in chronic myelogenous leukemia.
However, generic competition affected sales, mainly for Gleevec/Glivec (down 25% to $128 million) and Gilenya (declined 55% to $154 million). Also, Lucentis’ sales plunged 25% to $301 million.
The results of the Sandoz division and selected portions of corporate activities attributable to Sandoz business are reported discontinued operations from the third quarter.
2023 Results
Sales came in at $45.4 billion, up 8% year over year. The figure missed the Zacks Consensus Estimate of $47.5 billion. Core earnings (excluding one-time charges) of $6.47 per share missed the Zacks Consensus Estimate of $6.59.
In 2023, Novartis repurchased a total of 87.5 million shares for $8.4 billion.
Novartis expects net sales for 2024 to grow in mid-single digits.
Core operating income is now projected to grow in the high single-digits.
Key Updates
In December 2023, the FDA approved iptacopan as the first oral monotherapy for the treatment of adults with paroxysmal nocturnal hemoglobinuria under the brand name Fabhalta.
Our Take
Novartis’ performance in the fourth quarter missed expectations and the guidance for 2024 was not encouraging as well. Pluvicto sales missed estimates in the fourth quarter.
Novartis completed its strategic transformation into a pure-play innovative medicines company in 2023. While higher expenses impacted the quarterly results, key growth drivers should fuel growth in the mid-term.
Zacks Rank
Novartis currently carries a Zacks Rank #3 (Hold).
In the past 60 days, estimates for Novo Nordisk’s 2024 earnings per share have increased from $3.20 to $3.32. Shares of NVO have surged 56.8% in the past year.
Novo Nordisk’s earnings beat estimates in two of the last four quarters, met in one and missed in the other, delivering an average surprise of 0.58%. In the previously reported quarter, Novo Nordisk’s earnings beat estimates by 5.80%.
In the past 60 days, estimates for Regeneron’s 2024 earnings have risen from $41.60 per share to $44.17. REGN’s shares have risen 26.6% in the past year. The company's earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 12.34%.
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Novartis (NVS) Q4 Earnings Miss on Higher Costs, Sales Lag
Swiss pharma giant Novartis AG (NVS - Free Report) reported lower-than-expected results in the fourth quarter of 2023. Core earnings (excluding one-time charges) of $1.53 per share missed the Zacks Consensus Estimate of $1.64. Higher expenses pulled down the bottom line. The figure was, nevertheless, up from $1.39 recorded a year ago.
Revenues of $11.4 billion climbed 8% from the year-ago quarter's level. On a constant currency basis, sales increased 10%, driven by momentum in Entresto, Kesimpta, Kisqali, Cosentyx and Pluvicto. However, sales missed the Zacks Consensus Estimate of $11.7 billion.
Shares are trading down in the pre-market following the results.
Shares of Novartis have risen 2.8% in the past six months compared with the industry’s growth of 11%.
Image Source: Zacks Investment Research
In October 2023, Novartis completed the spin-off of its generic and biosimilar unit, Sandoz, following which the latter 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, a focused, innovative medicines company, operates as a single global operating segment. It is now concentrating on four core therapeutic areas (cardiovascular, renal and metabolic, immunology, and neuroscience and oncology).
Entresto’s sales rose 26% from the year-ago quarter's level to $1.63 billion due to sustained, robust demand-led growth on the back of increased patient share across all geographies. Entresto’s sales beat both the Zacks Consensus Estimate and our estimate of $1.62 billion.
Kesimpta (multiple sclerosis) sales came in at $641 million, up 73% on increased demand and strong access. Sales beat both the Zacks Consensus Estimate and our estimate of $611 million.
Kisqali’s stellar performance continued, with sales soaring 76% to $610 million. The figure beat the Zacks Consensus Estimate of $608 million and came in line with our estimate. Sales grew across all regions, based on increasing recognition of consistently reported overall survival in HR+/HER2- advanced breast cancer.
Cosentyx’s sales increased 21% to $1.30 billion, primarily benefiting from a lower prior-year base level. Sales missed the Zacks Consensus Estimate of $1.34 billion and our estimate of $1.33 billion.
Strong performances by Jakavi (up 14% to $444 million), Promacta/Revolade (up 4% to $563 million) and Tafinlar + Mekinist (up 7% to $486 million) also boosted the top line.
Pluvicto raked in sales of $273 million on the back of a solid launch in the United States. Novartis received approval for Pluvicto's expanded manufacturing capacity at Millburn, NJ and demand picked up. Novartis is now focused on initiating new patients. Sales, however, missed the Zacks Consensus Estimate of $336 million and our estimate of $333 million.
Zolgensma sales of $286 million were down 4% due to fewer incident patient treatments. Sales, missed the Zacks Consensus Estimate of $311 million and our estimate of $304 million.
Ilaris sales came in at $376 million, up 29% year over year as sales grew across all regions.
Xolair sales grew 16% year over year to $378 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 $125 million driven by its strong launch uptake, demonstrating the high unmet need in chronic myelogenous leukemia.
However, generic competition affected sales, mainly for Gleevec/Glivec (down 25% to $128 million) and Gilenya (declined 55% to $154 million). Also, Lucentis’ sales plunged 25% to $301 million.
The results of the Sandoz division and selected portions of corporate activities attributable to Sandoz business are reported discontinued operations from the third quarter.
2023 Results
Sales came in at $45.4 billion, up 8% year over year. The figure missed the Zacks Consensus Estimate of $47.5 billion. Core earnings (excluding one-time charges) of $6.47 per share missed the Zacks Consensus Estimate of $6.59.
In 2023, Novartis repurchased a total of 87.5 million shares for $8.4 billion.
Novartis AG Price, Consensus and EPS Surprise
Novartis AG price-consensus-eps-surprise-chart | Novartis AG Quote
2024 Guidance
Novartis expects net sales for 2024 to grow in mid-single digits.
Core operating income is now projected to grow in the high single-digits.
Key Updates
In December 2023, the FDA approved iptacopan as the first oral monotherapy for the treatment of adults with paroxysmal nocturnal hemoglobinuria under the brand name Fabhalta.
Our Take
Novartis’ performance in the fourth quarter missed expectations and the guidance for 2024 was not encouraging as well. Pluvicto sales missed estimates in the fourth quarter.
Novartis completed its strategic transformation into a pure-play innovative medicines company in 2023. While higher expenses impacted the quarterly results, key growth drivers should fuel growth in the mid-term.
Zacks Rank
Novartis currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A couple of better-ranked stocks in the healthcare industry are Novo Nordisk (NVO - Free Report) and Regeneron Pharmaceuticals (REGN - Free Report) . NVO currently sports a Zacks Rank #1 (Strong Buy) and REGN carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Novo Nordisk’s 2024 earnings per share have increased from $3.20 to $3.32. Shares of NVO have surged 56.8% in the past year.
Novo Nordisk’s earnings beat estimates in two of the last four quarters, met in one and missed in the other, delivering an average surprise of 0.58%. In the previously reported quarter, Novo Nordisk’s earnings beat estimates by 5.80%.
In the past 60 days, estimates for Regeneron’s 2024 earnings have risen from $41.60 per share to $44.17. REGN’s shares have risen 26.6% in the past year. The company's earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 12.34%.