Novartis AG (NVS, Financial) released its first-quarter 2017 financial results on April 25.Â
The Swiss global pharmaceutical company closed the quarter with EPS of $1.13, a 2.6% decrease on a year-over-year basis. The company beat analysts’ expectations by one cent, generating a positive surprise of 0.9%.
Source: Yahoo Finance
Analysts forecasted an average EPS of $1.12, ranging between a low of $1.06 and a high of $1.18. The operating income for the quarter was $1.922 billion, a 22% decrease from $2.451 billion in the comparable quarter of 2016. The net income was $1.665 billion versus a net income of $2.011 billion at the end of first-quarter 2016.
Revenue came in at $11.54 billion, a 0.5% decrease on a year-over-year basis. The company missed expectations on revenue by $110 million.
Source: Yahoo Finance
Analysts forecasted Novartis’ revenue would be $11.65 billion on average. The estimates ranged between a low $11.47 billion and a high of $11.85 billion. For the next quarter, analysts forecast revenue will come in at $12.23 billion. For the year, they expect a 0.20% decline to $48.44 billion from $48.89 billion.
The pharmaceutical company's innovative medicines segment closed the quarter with revenue of $7.692 billion, down 0.5% on a year-over-year basis; Sandoz with $2.430 billion, down 0.6% a year-over-year basis; and Alcon with $1.417 billion, down 0.6% a year-over-year basis.
The oncology business unit reported a 6% decline in sales, from $3.029 billion in first-quarter 2016 to $2.856 billion.
CEO Joseph Jimenez commented on the company’s solid performance.
"Growth drivers, including Cosentyx and Entresto, more than offset generic erosion, mainly due to Glivec," Jiminez said. "The innovation momentum continued in the quarter, led by the launch of Kisqali, and the FDA Priority Review for CTL019 in the U.S. This reinforces our confidence in our next growth phase, which we expect to start in 2018.”
Among the company's key products, Gilenya sales were $722 million, up 3% year over year. Gleevec-Glivec sales were $544 million, down 35% on a year over year basis. Lucentis sales were down 2% at $445 million. Tasigna sales were up 8% at $411 million. Cosentyx sales were $410 million, up 133% on a year-over-year basis. Sandostatin sales were $385 million, down 4% year over year. Afinitor-Votubia sales were down 6% year over year at $344 million.
From operations, the company generated $2.054 billion in cash flow, a substantial increase from the comparable period a year ago. Free cash flow increased 22% from $1.362 billion in first-quarter 2016 to $1.665 billion.
Novartis closed at $76.24 per share yesterday, up $1.63 or 2.18% from the previous trading day with a volume of 3,574,083 shares traded on the New York Stock Exchange.
The stock is uptrending and has gained 4.7% year to date. It is currently trading with a price-earnings (P/E) ratio of 27.67, a price-book (P/B) ratio of 2.36 and a price-sales (P/S) ratio of 3.72. The forward P/E ratio is 15.75. With EPS forecasted to be $4.7 on average, the pharma stock looks slightly overvalued based on the current share price.
Analysts, however, are still very confident in further upside for Novartis since they estimate an average price target of $85.25, up $9.01 per share from the current share price. The target price ranges between a low of $80 and a high of $92.
The recommendation rating is 2 of 5. The rating ranges between 1.0 (Strong Buy) and 5.0 (Sell). Liberum recently initiated coverage of Novartis with a buy rating. The pharma stock has been given two upgrades and four downgrades over the last 12 months. The most recent rating was issued by Societe Generale on March 8. The firm upgraded Novartis from hold to buy.
The company has approximately $8.24 billion in cash and securities as of March 31, while long-term debt amounts to $22.93 billion. The net debt is $23.020 billion.
During the first quarter, Ken Fisher (Trades, Portfolio) increased his Novartis stake by 0.77% to 6,121,673 shares.
Disclosure: I have no positions in Novartis AG.
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