Novartis (NVS – Analyst Report) has a strong presence in the healthcare market across the world. This Switzerland based company has a presence in the field of oncology, neuroscience, ophthalmology and generics.
However, like many of its peers, Novartis is facing generic competition and pricing pressure for some of the products in its pharmaceutical segment. Novartis' blockbuster drug, Diovan lost exclusivity both in the U.S. and EU and entry of generics will hurt sales in 2015. The patent on Gleevec will expire in 2015 in the U.S. and the EU in 2016 for all major indications.
In this scenario, investor focus remains on late-stage pipeline candidates and their commercial potential, apart from the usual top-and bottom-line numbers. Meanwhile, Novartis undertook a series of steps to reorganize its portfolio in 2014 in order to focus on its core businesses of pharmaceuticals, eye care and generics. The company recently sold its Animal Health Division. Novartis also acquired certain oncology products and pipeline compounds from GlaxoSmithKline.
Novartis has a mixed track record. The company beat estimates twice in the last four trailing quarters posting a positive average earnings surprise of 6.26%.
Currently, Novartis has a Zacks Rank #3 (Hold), but that could definitely change following the company's earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: Novartis beat on earnings in the second quarter of 2015. Our consensus called for EPS of $1.20, and the company reported EPS of $1.27.
Revenue: Novartis posted revenues of $12.7 billion, in line with our consensus estimate.
Key Stats: Once again, the pharmaceutical segment delivered with key drugs performing well. The key drugs at Novartis – Gilenya, Afinitor, Tasigna, Lucentis, Xolair, the chronic obstructive pulmonary disease portfolio and Jakavi continue to drive growth. However, generic competition for Diovan monotherapy and Exforge negatively impacted sales. Generics are projected to impact sales by $2.4 billion in 2015 (approximately the same as 2014).
