A look at Novartis’s earnings
Novartis (NVS) is one of the world’s largest pharmaceutical companies by revenue. It’s headquartered in Basel, Switzerland. The company specializes in the research, development, manufacturing, and marketing of a broad range of healthcare products.
Further details about the company can be found in Market Realist’s series Novartis: Investor Insights into a Pharmaceutical Multinational.
Novartis is set to release its 3Q16 earnings on October 25, 2016. Analysts estimate EPS (earnings per share) of $1.19 for the company in 3Q16. Novartis’s stock has fallen nearly 14% over the last 12 months. Investors can find earnings reviews for other pharmaceutical companies on our Pharmaceuticals Earnings Overview page.
3Q16 revenue estimates
Novartis acquired GlaxoSmithKline’s (GSK) Oncology segment and divested its Vaccines and Consumer Healthcare segments to GlaxoSmithKline in March 2015. Considering adjustments for its divested business, analysts expect NVS’s 3Q16 revenue to fall a marginal ~0.6% to ~$12.2 billion, compared to $12.3 billion in 3Q15.
Novartis’s major revenue drivers are its Pharmaceuticals segment and Sandoz, its generic pharmaceuticals business. Alcon, its eye care business, is expected to see lower sales due to competition in the surgical care and contact lens products spaces.
On October 20, 2016, Novartis was trading at a forward PE (price-to-earnings) multiple of ~14.9x, compared to the industry average of 14.6x.
The company is trading at a higher PE than Sanofi (SNY), which is trading at a forward PE of 12.7x, while GlaxoSmithKline (GSK) and AstraZeneca (AZN) are trading at PEs of 15.8x and 15.3x, respectively.
Novartis’s stock price has fallen nearly 14% over the last 12 months. Analysts expect the stock to return ~23% in the next 12 months. Analysts’ recommendations show a 12-month target price of $93.40 per share for Novartis, compared to the stock’s price of $75.92 per share on October 20, 2016.
63% of analysts recommend “buys” on the stock, while 37% recommend “holds,” according to a Bloomberg consensus. It’s been observed that changes in analysts’ estimates and recommendations are based on changing stock price trends.
To diversify risk, investors can consider ETFs such as the Schwab Fundamental International Large Company ETF (FNDF), which holds nearly 1% in Novartis.