Novartis Posts Earnings, Revenue Miss
- By Alberto Abaterusso
Novartis AG (NVS) reported fourth-quarter results before the opening bell on Wednesday.
The Swiss pharmaceutical company posted non-GAAP earnings of $1.25 per share and GAAP earnings of 52 cents per share, falling 3 cents and 35 cents short of analysts' estimates. Revenue came in at $13.27 billion, missing expectatons of $13.37 billion.
Warning! GuruFocus has detected 2 Warning Sign with NVS. Click here to check it out.
The intrinsic value of NVS
By segment, sales in the innovative medicines business increased 5.4% year over year to $9.022 billion, sales from the Sandoz division fell 5.2% from the prior-year quarter to $2.459 billion and Alcon sales rose 1.5% to $1.788 billion.
In addition, the global drug manufacturer recorded sales increases in several key products. Sales of Cosentyx, a medication used to treat plaque psoriasis and specific types of arthritis, increased 31% to $806 million. Sales from Entresto, a heart failure medication, climbed 72% to $318 million. Sales of Promacta/Revolade, which is used to treatment thrombocytopenia (low platelet count), grew 29% to $330 million. Sales of skin cancer treatment Tafinlar Mekinist increased 27% to $313 million. Sales of breast cancer treatment Kisqali jumped 71% to $60 million. Javaki, which treats certain bone marrow disorders, sales rose 12% to $256 million. Sales of Lutathera, which is used to treat patients with gastroenteropancreatic neuroendocrine tumours, were $81 million and sales of Kymriah, a gene therapy for a certain type of cancer, were $28 million.
These brands have not only allowed Novartis to achieve significant growth in core earnings, revenue and operating cash flow, but give an optimistic projection regarding future earnings and sales expansion. In the fourth quarter, cash flow from operations increased 11% to $3.77 billion from $3.41 billion in the prior-year quarter.
The company also anticipates the launch of about 10 potential blockbuster drugs over the next two years.
For full-year 2019, Novartis expects ongoing growth in net sales, Alcon and innovative medicines. In contrast, Sandoz is expected to slightly decline.
In addition, the board of directors has proposed a 2% hike in the annual dividend payment to 2.85 Swiss francs ($2.85) per ordinary share from the previous distribution of 2.80 francs. Shareholders will vote on the proposal during the company's next annual meeting.
The stock's price has decreased 5% for the 52 weeks through Jan. 30 to a market capitalization of $198.66 billion. The closing share price of $85.7 on Wednesday was 18.5% off the 52-week low of $72.30 and 7.8% below the 52-week high of $92.39.
The company has a price-sales ratio of 3.91 compared to an industry median of 3.1 and a price-earnings ratio of 15.24 versus an industry median of 21.6.
The forward dividend yield is 3.39% versus an industry median of 1.66% as of Jan. 30.
The Peter Lynch chart suggests the stock is fairly valued.
Wall Street analysts recommend buying shares of Novartis. The average target price is $100 per share, which reflects a 16.7% upside from the closing price on Jan. 30.
Disclosure: I have no positions in any securities mentioned in this article.
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This article first appeared on GuruFocus.
Warning! GuruFocus has detected 2 Warning Sign with NVS. Click here to check it out.
The intrinsic value of NVS
