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Novartis Missed Revenue Estimates in Q3 2018

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Novartis’s revenue

Novartis (NVS) released its third-quarter earnings results on October 18. The company surpassed Wall Street analysts’ consensus estimate for EPS but missed their estimate for revenue in the quarter.

Novartis reported EPS of $1.32 on revenue of ~$12.78 billion compared to analysts’ estimate of EPS of $1.31 on revenue of ~$13.02 billion.

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The chart above compares Novartis’s revenues and EPS since the first quarter of 2017.

Third-quarter revenue

During the third quarter, Novartis reported revenue growth of 3% YoY (year-over-year) to $12.78 billion. This growth included a 6% rise in operating revenue and was offset by a 3% negative impact of foreign exchange.

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Geographical performance

At constant exchange rates, the company’s US sales rose 4% to ~$4.4 billion in the quarter. Its US operating growth was driven by a 10% increase in Innovative Medicines sales and a 5% increase in Alcon sales, and it was offset by a 17% fall in Sandoz sales in US markets during the quarter.

At constant exchange rates, sales in Novartis’s European markets increased 6% to ~$4.6 billion during the quarter. The region’s operating growth was driven by a 9% increase in Innovative Medicines sales, a 1% increase in Sandoz sales, and a 2% increase in Alcon sales during the quarter. It was substantially offset by the negative impact of foreign exchange.

Sales in the Asian, African, and Australasian markets rose 5% to ~$2.7 billion at constant exchange rates during the quarter. These markets’ operating growth was driven by a 5% increase in Innovative Medicines sales, a 6% increase in Sandoz sales, and an 8% increase in Alcon sales during the quarter, and it was partially offset by the negative impact of foreign exchange.

Sales in Novartis’s Canadian and Latin American markets increased 12% to ~$981 million at constant exchange rates during the quarter. These markets’ operating growth was driven by a 14% increase in Innovative Medicines sales, a 5% increase in Sandoz sales, and a 9% increase in Alcon sales during the quarter. The growth was more than offset by the negative impact of foreign exchange.

The First Trust Value Line Dividend ETF (FVD) holds 0.5% in Novartis, 0.5% in Johnson & Johnson (JNJ), 0.5% in Amgen (AMGN), and 0.5% in Pfizer (PFE).

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