Novartis Stock Up As Q2 Results Top View, Backs FY18 Outlook

Shares of Novartis AG (NVS) were gaining around 2 percent in the morning trading in Zurich after the Swiss drug major reported Wednesday significantly higher profit in its second quarter with a hefty net gain from the stake sale in the GSK consumer healthcare joint venture, as well as higher sales. Both core profit and net sales topped analysts’ estimates. Further, the company reiterated its fiscal 2018 outlook.

For the second quarter, net income surged to $7.77 billion from last year’s $1.98 billion. Earnings per share grew to $3.34 from $0.84 last year.

The latest quarter’s results included a net gain of $5.7 billion from the $13 billion sale of the company’s stake in the GSK consumer healthcare joint venture.

Core net income was $3.01 billion or $1.29 per share, compared to $2.87 billion or $1.22 per share a year ago.

Core operating income grew 7% from last year to $3.54 billion, driven by higher sales and improved gross margin, partly offset by growth investments. The company said the growth in core operating income was partly offset by the discontinuation of core income from the GSK consumer healthcare JV.

Net sales for the quarter grew 7 percent to $13.16 billion from $12.24 billion last year. Net sales rose 5 percent in constant currencies.

On average, analysts polled by Thomson Reuters expected earnings of $1.27 per share on sales of $12.94 billion. Analysts’ estimates typically exclude special items.

In the quarter, volume grew 9 percentage points at constant rates, mainly driven by Innovative Medicines growth drivers, partly offset by the negative impacts of pricing and generic competition.

At constant rates, Cosentyx sales grew 40 percent with strong growth in all indications in the US and EU. Entresto sales more than doubled driven by continued uptake worldwide, and oncology sales grew 10%.

Looking ahead to fiscal 2018, Novartis reaffirmed its outlook for Group net sales to grow low to mid-single digit and group core operating income to grow mid to high-single digit, both at constant currency rates.

Reflecting the first half performance, the company revised its sales guidance for Alcon upwards to mid-single digit growth, while Sandoz is revised downwards to low-single digit decline.

Novartis shares were trading at 79.82 Swiss francs, up 2.07 percent.

by RTTNews Staff Writer

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