{"id":69298,"date":"2023-10-06T01:00:44","date_gmt":"2023-10-06T05:00:44","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/novartis-better-margin-visibility-ex-sandoz-nysenvs\/"},"modified":"2023-10-06T01:00:50","modified_gmt":"2023-10-06T05:00:50","slug":"novartis-better-margin-visibility-ex-sandoz-nysenvs","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=69298","title":{"rendered":"Novartis: Better Margin Visibility Ex Sandoz. (NYSE:NVS)"},"content":{"rendered":"<div data-test-id=\"content-container\">\n<p><figure class=\"getty-figure\" data-type=\"getty-image\"><picture><\/picture><figcaption><\/figcaption><\/figure>\n<\/p>\n<p>Today at the Lab, we decided to recap Novartis&#8217; latest and subsequent development (<span class=\"ticker-hover-wrapper\">NYSE:NVS<\/span>, OTCPK: NVSEF). As a reminder, on the 15th of September 2023, at the Extraordinary General Meeting, the company&#8217;s shareholders approved the Sandoz spin-off. Our internal<span class=\"paywall-full-content invisible\"> team views this business separation positively, given that the companies have limited synergies. In addition, this spin-off will likely extrapolate more value embedded in the Novartis Innovative Medicine division and simultaneously create a global leader in Generics and Biosimilars. Yesterday was Sandoz&#8217;s D-day, and the company <\/span>was listed<span class=\"paywall-full-content invisible\"> with an IPO for a market value of $11.2 billion.<\/span><\/p>\n<p class=\"paywall-full-content invisible\">Looking at the press release details, Novartis completed &#8220;<em>the Spin-off through a dividend-in-kind distribution to holders of Novartis shares and American Depositary Receipts (ADRs), with each holder receiving one Sandoz share for every five Novartis shares or one Sandoz ADR<span class=\"paywall-full-content no-summary-bullets invisible\"> for every five Novartis ADRs, held at the close of business on October 3, 2023.&#8221;<\/span><\/em><span class=\"paywall-full-content no-summary-bullets invisible\"> The new listing was placed with the SIX Swiss Exchange under the ticker &#8216;SDZ,&#8217; but there is already an ADR in the US (with an over-the-counter market). Here at the Lab, we are not new to commenting on this type of operation, as a reminder, last year, <\/span>we reported<span class=\"paywall-full-content no-summary-bullets invisible\"> Eurapi&#8217;s spin-off from Sanofi. This deal made Sanofi a more agile company and extrapolated the actual value of the company&#8217;s drug portfolio.<\/span><\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">The New Novartis<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In line with Sanofi, Novartis has now completed its business transformation to become a leader in innovative medicines. Indeed, the company is well-positioned for sustained top &amp; bottom line growth thanks to four areas: Oncology, Neuroscience, Immunology, and Cardiovascular, Renal &amp; Metabolic. Despite the spin-off, Novartis reaffirmed its 2023 outlook which was already raised in Q2 with the following: top-line sales forecasted to grow high single digits and EBIT to increase by low double digits to mid-teens. We can say that Novartis&#8217;s strategic plan unveiled in 2022 is almost completed. In addition, to support shareholders&#8217; remuneration, the company confirmed its growing dividend per share policy, with no re-basing after the spin-off and its ongoing buyback, which is equal to $15 billion.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In our estimates, Novartis ex-Sandoz might experience a margin uplift. In Q2, we reported the following: &#8220;<em>What we liked was the restructuring process, which started to be evident in H1 and reflected the company&#8217;s margin improvements&#8221;<\/em>. Here at the Lab, despite LOEs on Entresto\/Promacta, we anticipated a 2.5% CAGR revenue growth combined with a 3.7% core operating profit growth until 2028. How? Our internal team sees upside sales from Pluvicto (pre-chemo &#8211; Fig 1), Kisgali (adjuvant &#8211; Fig 2), Iptacopan (kidney disease with a readout planned in Q4 2023), and Scemblix (1L use with a submission and readout in 2024). In addition, Novartis has two existing technology platforms and three following platforms to increase internal R&amp;D capabilities and add production capacity scale. At the moment, Novartis has a rich pipeline with approximately 150 projects in clinical development with a lower generics competition.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/51181085-16965124420013149.png\" alt=\"Pluvicto sales development\" contenteditable=\"false\" loading=\"lazy\"><\/span><\/picture><figcaption>\n<p class=\"item-caption\">Pluvicto sales development<\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Fig 1<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/51181085-16965124173465128.png\" alt=\"Kisgali sales development\" contenteditable=\"false\" loading=\"lazy\"><\/span><\/picture><figcaption>\n<p class=\"item-caption\">Kisgali sales development<\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Fig 2<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">For the above reason, in a stand-alone model, excluding Sandoz, we anticipate a top-line sales CAGR of 3% until 2027 (Fig 3). In addition, despite the buyback, Novartis is actively looking for M&amp;A. Recently, Novartis reached an agreement to acquire biopharmaceutical company Chinook Therapeutics for a total consideration of approximately $3.5 billion. With this acquisition, Novartis primarily intends to strengthen its pipeline in the field of kidney diseases (Fig 4).<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/51181085-16965122110513723.png\" alt=\"Novartis sales\" contenteditable=\"false\" loading=\"lazy\"><\/span><\/picture><figcaption>\n<p class=\"item-caption\">Novartis sales<\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Fig 3<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/51181085-1696512622884708.png\" alt=\"Chinook Therapeutics transaction\" contenteditable=\"false\" loading=\"lazy\"><\/span><\/picture><figcaption>\n<p class=\"item-caption\">Chinook Therapeutics transaction<\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Fig 4<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">Conclusion and Valuation<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Although our internal team has a positive view of recent the company&#8217;s progress and potential positive catalyst thanks to a rich pipeline, we retain our preference for Roche, Lonza, and Grifols. Post Q2 results, we raised our visible period forecast which is in line with the company&#8217;s latest guidance; however, looking at the valuation, we reaffirmed our CHF 90 target price with a 2024 price earning of 14.5x (in line with our EU pharma peers). Our neutral rating is then confirmed.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Editor&#8217;s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/seekingalpha.com\/article\/4639312-novartis-stock-better-margin-visibility-ex-sandoz-reiterate-hold?source=feed_all_articles\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Today at the Lab, we decided to recap Novartis&#8217; latest and subsequent development (NYSE:NVS, OTCPK: NVSEF). As a reminder, on the 15th of September 2023, at the Extraordinary General Meeting, the company&#8217;s shareholders approved the Sandoz spin-off. Our internal team views this business separation positively, given that the companies have limited synergies. In addition, this [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":69299,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-69298","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Novartis: Better Margin Visibility Ex Sandoz. 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