Novartis raises FY profit guidance after strong quarter

Investing.com - Novartis (SIX: NOVN) raised its profit guidance Thursday, as the Swiss drugmaker reported second-quarter profit and sales ahead of expectations, boosted by revenue from its blockbuster treatments.

Novartis now expects full-year core operating income to grow by mid- to high teens percentages, from low double-digit to mid-teens, based on strong momentum.

“Novartis delivered a strong Q2, with net sales up 11% and core operating income margin approaching 40%,” said CEO Vas Narasimhan, in a statement. “Our performance reflects continued strong momentum of our key growth drivers, both in the US and ex-US, which has allowed us to upgrade our FY2024 guidance.”

Citi Research has maintained a ‘neutral’ rating, with a CHF97 target price.

“Dynamic growth for most of the key drivers offsetting stronger tail erosion,” said analysts at Citi, in a note. “Despite R&D investments remaining high, FY core EBIT guidance has been raised, and FX impacts moderated, implying consensus earnings upgrades up to 4% and FY24 EBIT/EPS CER [constant exchange rate] growth of 15-19%.”

As far as products are concerned, “Kesimpta was notably strong (9% beat), and Zolgensma beat consensus by 17%,” Citi said. “Cosentyx posted a 4% beat, with the company noting strong launch in HS [hidradenitis suppurativa], partly offset by some one-off adverse pricing impact ex US.”

At 06:20 ET (10:20 GMT), Novartis stock fell 1.4% to CHF97.69 despite the update, but is still up around 15% year to date.

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