Novartis beats third quarter expectations, delays Alcon spinoff
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Novartis beats third quarter expectations, delays Alcon spinoff

Pharmaceutical giant Novartis posted third quarter earnings this week, beating analysts’ estimates and reporting that the spinoff of eyecare unit Alcon (if it still goes ahead) could be delayed until 2019. The Swiss group also confirmed its full year outlook, and saw strong performance from its psoriasis drug Cosentyx (which generated sales of $556 million) and its heart drug Entresto (which more than doubled sales to $128 million – despite missing expectations).

Novartis’ share price has appreciated by 12% so far this year

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SOURCE: Yahoo Finance

Novartis said third quarter core net income rose by 4% (at constant currencies) to $3.02 billion against the same period in the previous year. This was an easy beat against analysts’ expectations of $2.93 billion. The company also beat expectations on sales, which rose by 2% from the year-ago quarter to $12.4 billion. Analysts forecast $12.2 billion in sales for the three-month period.

The company’s previously “troubled” eyecare unit saw sales rise by 7% in constant currencies. Novartis execs said that the unit’s future depended on continued sales growth and margin improvement over multiple quarters. Any potential action is, therefore, “not likely before the first half of 2019.”

Regarding Alcon, Novartis issues a statement saying: "The strategic review also indicates that creating a stand-alone company via a capital markets exit could create additional shareholder value. We have also made significant progress on developing a potential capital markets solution, including financial carve-outs, tax and legal entity structuring, and identifying listing and incorporation locations."

Disclosure

Dominion holds Novartis in its Global Trends Managed Fund.


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