Novartis Gets Retail Chatting After Upbeat Q4, But Sentiment Stays Tepid Amid Volatile Trading

Shares of Swiss pharmaceutical giant Novartis AG were flat on Friday morning in heavy trading volume, despite the company reporting impressive quarterly results. 

Novartis posted core fourth-quarter (Q4) earnings per share (EPS) of $1.98, up from $1.53 last year, beating the consensus estimate of $1.80. 

Meanwhile, Q4 revenue reached $13.2 billion, surpassing the previous year’s $11.4 billion and analysts’ expectations of $12.84 billion.

The company attributed its strong sales growth to its blockbuster heart-failure drug Entresto and arthritis medication Cosentyx. 

CEO Vas Narasimhan expressed optimism, stating, “In our first full year as a pure-play innovative medicines company, Novartis delivered one of the strongest financial performances in our history, growing sales 12% cc [constant currency basis] and core operating income 22% cc.” 

He added that the company achieved key innovation milestones, including new drug approvals and promising data that would drive growth in the mid- to long-term.

Despite the upbeat results, retail sentiment on Stocktwits was mixed. Although message volume surged into ‘extremely bullish’ territory, sentiment remained ‘bearish,’ indicating some hesitation among retail traders. 

NVS sentiment and message volume Jan 31 as of 11:45 am ET | source: Stocktwits

Novartis is facing upcoming patent expirations for three key drugs, with Entresto expected to face generic competition in the U.S. mid-year. 

Additionally, two other top-selling drugs, Tasigna for leukemia and Promacta for a blood disorder, will face generics in the U.S.

However, Narasimhan reassured investors, emphasizing the company’s “tremendous replacement power” and its ability to bring new treatments to market when patents on existing drugs expire. 

He also highlighted the company’s strong pipeline, with more than 30 assets that could drive differentiated growth over the long term, including updates on its cardiovascular drug candidate pelacarsen and a key late-stage trial this year.

Looking ahead, Novartis forecasted FY25 net sales growth in the mid- to high-single-digit range, with core operating income expected to grow in the high single to low double-digit range. 

The company also proposed a 6.1% increase in its dividend to 3.50 Swiss francs per share for 2024.

Although Novartis' stock has lost 0.1% over the past 12 months, it is up more than 7% so far this year.

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