Novartis AG (NVS) is gearing up to release its third-quarter 2023 financial results on October 24. With a track record of consistently surpassing earnings expectations, the Swiss pharmaceutical giant is well-positioned to deliver another impressive report.
Factors Driving Growth
Novartis operates under two segments: Innovative Medicines and Sandoz (generics). The recent spin-off of its generic and biosimilar unit, Sandoz, is expected to streamline operations and enhance focus on innovative medicines. Sales in the Innovative Medicines division have likely been boosted by strong performances from key drugs such as Entresto, Pluvicto, Kesimpta, Scemblix, and Kisqali.
Entresto sales have experienced significant growth due to increased demand and adoption of guideline-directed medical therapy. Pluvicto, the first and only radioligand therapy for a specific type of prostate cancer, is also anticipated to report robust growth. Other drugs, such as Kesimpta and Kisqali, are expected to maintain their positive momentum.
However, the top line may be affected by generic competition for Gilenya and Lucentis in both the United States and Europe.
Novartis faced an unfavorable ruling from the U.S. District Court for the District of Delaware regarding the validity of a patent covering Entresto, which could have an impact on the company’s future revenue. On a positive note, Novartis acquired Chinook Therapeutics, a clinical-stage biopharmaceutical company, to bolster its renal pipeline and expand its portfolio.
This year, Novartis stock has gained 4.3%, slightly trailing behind the industry’s growth of 6.9%.
What to Expect
While Novartis has consistently outperformed earnings expectations in the past, our model does not conclusively predict an earnings beat this quarter. However, investors should keep an eye on other drug/biotech stocks that have a higher likelihood of beating earnings, including Biogen (BIIB), GSK PLC (GSK), and AstraZeneca (AZN).
Novartis is expected to maintain its strong performance in the third quarter, driven by sales of key drugs in the Innovative Medicines division. However, challenges such as generic competition could impact the company’s revenue. Investors should closely monitor Novartis’ earnings report for insights into the company’s future growth potential.