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Analysts’ Recommendations for Novartis and Its Peers in July

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Novartis’s transformation

Since 2014, Novartis (NVS) has focused on transforming from a healthcare conglomerate to a medicine company through strategic divestments and acquisitions. On March 27, GlaxoSmithKline (GSK) bought out Novartis’s stake in the consumer healthcare business. 

On June 29, Novartis announced its intention to spin off its Alcon business. Novartis has also prioritized certain therapeutic areas in its Innovative Medicines business while exiting the infectious diseases research area.

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In October 2017, Novartis announced its plans to acquire oncology player Advanced Accelerator Applications, and it completed a tender offer in January. On May 15, the company also announced the completion of the acquisition of gene therapy player AveXis. In January, Novartis also secured the international rights for ophthalmology gene therapy company LUXTURNA from Spark Therapeutics.

Novartis’ Pharmaceuticals unit accounted for 47.0% of the company’s total revenues in 2017, after the spin-off of Alcon. This is significantly higher than the revenue exposure of the segment in 2014, before the portfolio transformation, which was ~38.0%.

The revenue exposure of the company’s Oncology unit rose from 20.0% in 2014 to 29.0% in 2017, while that of Sandoz increased from 19.0% to 24.0%.

Analysts’ recommendations for Novartis

Of the 26 analysts covering Novartis in July, six recommended the company as a “strong buy,” seven recommended it as a “buy,” 12 recommended the company as “hold,” and only one analyst recommended the company as a “sell.” 

Analysts’ recommendations for NVS’s peers

Of the 21 analysts covering Pfizer (PFE) in July, 52.4% recommended a “buy.” About 73.7% of the 19 analysts covering Merck (MRK) stock recommended a “buy,” and 35.0% of the 20 analysts tracking Bristol-Myers Squibb (BMY) recommended a “buy.”

In the next article, we’ll discuss the revenue growth prospects for Novartis in fiscal 2018.

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