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Novartis (NVS) Up 10.8% YTD on Strong Q1, Pipeline Progress

Shares of Novartis NVS have gained 10.8% in the year so far compared with the industry’s 1.6% growth.

The stock has had a good run so far in 2023. It gained strong momentum in the last couple of months.

Novartis’ performance in the first quarter was better than expected, as earnings and sales beat estimates, and guidance was raised. This boosted investors’ sentiment and increased its share price.

While the older drugs face generic competition, the continued strong performance of Entresto, Pluvicto, Kesimpta and Kisqali fueled growth and should maintain momentum. Pluvicto and Scemblix saw very strong launches and recorded solid sales. Demand for Pluvicto continues to exceed supply in the United States. The Leqvio launch continues to progress well.

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Growth engine Entresto’s sales rose 32% in the first quarter to $1.4 billion due to sustained, robust demand-led growth and increased patient share across all geographies. In March, the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending approval of Entresto for a new indication to treat symptomatic chronic heart failure with left ventricular systolic dysfunction in pediatric patients. Entresto is indicated to reduce the risk of cardiovascular death and hospitalization for heart failure in adult patients with chronic heart failure in the United States.

Shares also surged in March after Novartis announced the positive top-line results from an interim analysis of the late-stage NATALEE study on the breast cancer drug Kisqali. The Independent Data Monitoring Committee recommended that the study be stopped early as the primary endpoint of invasive disease-free survival (iDFS) was met.

 

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The positive top-line results from NATALEE support Novartis’ efforts to expand the benefits of Kisqali to patients with earlier stages of breast cancer. Kisqali's sales gained 81% in the first quarter to $415 million and should gain further momentum.

In December 2022, the European Commission (EC) approved Pluvicto in combination with androgen deprivation therapy (ADT) with or without androgen receptor (AR) pathway inhibition for the treatment of adult patients with prostate-specific membrane antigen (PSMA)-positive metastatic castration-resistant prostate cancer (mCRPC). Last month, the FDA approved the Millburn facility for commercial production of Pluvicto, which should contribute meaningfully to supply in the third quarter.

However, the performance of Novartis’ other growth driver, Cosentyx, was pretty ordinary in the first quarter, as sales growth across key geographies was impacted by revenue deduction adjustments in the United States.

Novartis earlier announced that it planned to spin off Sandoz into a new publicly traded standalone company following a strategic review. The planned spin-off of the Sandoz unit remains on track for the second half of 2023. With the planned spin-off of Sandoz, Novartis is looking to become a pure-play pharmaceutical company.

Novartis currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the healthcare sector are Ligand Pharmaceuticals LGND and Novo Nordisk NVO. The companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 30 days, earnings estimates for LGND have increased by 63 cents to $4.79. LGND topped earnings estimates in two of the last four quarters and missed in the remaining two, the average surprise being 21.50%.

Over the past 30 days, estimates for NVO’s 2023 earnings have risen by 11 cents to $4.95. Novo Nordisk topped earnings estimates in three of the last four quarters and missed the same in the remaining one, the four-quarter earnings surprise being 0.35%, on average.

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Novo Nordisk A/S (NVO) : Free Stock Analysis Report

Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report

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