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Assessing the Performance of Novartis Stock in 1Q18

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A look at Novartis

Headquartered in Basel, Switzerland, Novartis (NVS) is a pharmaceutical company that specializes in researching, developing, manufacturing, and marketing a broad range of healthcare products.

The company reports its business in three segments: Innovative Medicines, Sandoz (its generics business), and Alcon (its eye care business).

The chart above compares Novartis’s revenues and EPS (earnings per share) since 1Q16 along with estimates for its 1Q18.

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Stock price performance

Novartis stock has fallen ~7.0% in 1Q18, and it’s fallen 4.5% YTD (year-to-date) as of April 6, 2018.

Analysts’ recommendations

Wall Street analysts expect Novartis to return ~22.3% over the next 12 months. Analysts’ recommendations show a 12-month target price of $98.06 on the stock compared to its price of $80.20 on April 6, 2018.

There are four analysts tracking Novartis’s ADR (American depositary receipt). Of these, one analyst recommends a “strong buy,” one recommends a “buy,” one recommends a “hold,” and one recommends a “sell.”

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There are 27 analysts tracking Novartis stock as it’s listed on the SIX Swiss Exchange. Of these, seven analysts recommend “strong buys,” nine recommend “buys,” eight recommend “holds,” and three recommend “sells.” The consensus rating for Novartis stands at 2.26, which represents a strong buy for value investors and a moderate buy for long-term investors.

Analysts’ revenue estimates

Novartis’s revenue is mainly driven by the strong performance of its Innovative Medicines business, while its Sandoz and Alcon businesses also contribute toward its overall growth.

Analysts expect Novartis to report revenue of $12.4 billion in 1Q18, a ~7.4% rise compared to 1Q17. They expect its EPS to be $1.29 in 1Q18.

The BLDRS Europe Select ADR ETF (ADRU) holds 21.0% of its total investments in healthcare companies. ADRU holds 6.1% in Novartis AG ADR (NVS), 2.8% in GlaxoSmithKline ADR (GSK), 2.6% in AstraZeneca ADR (AZN), and 2.7% in Sanofi ADR (SNY).

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