Novartis Raises Forecast – US-FOREX.US
Swiss drugmaker Novartis managed to overshadow a 10% drop in profits for the second quarter after it raised its 2009 forecast for drug sales on Thursday, betting on income from cancer and heart medicines.Shares of Novartis
rose 3.7%, or 1.60 Swiss francs , to 45.30 Swiss francs on Thursday morning in Zurich as second-quarter net profit met expectations.Novartis’ second-quarter net profit fell 10%, to 2 billion, due to the stronger dollar and higher financing costs and the group repeated an earlier warning that currency-related losses could hit annual profit. “These are good numbers, slightly ahead of consensus, with the pharmaceutical business being the main driver of the company,” said Andrew Weiss, an analyst with Bank Vontobel. “The cost containment measures in place exceeded our expectations and that helped the margins despite the negative impact of currencies.”"This is a good surprise and this will get people back interested in Novartis, at least in the short term.”Weiss said Novartis’ diversified business-from generics to consumer health-gave the company a clear lead among rivals, but its over-the-counter business has been going through rough times because of the downturn in consumer demand.
In the short term, Novartis is also expected to benefit from its H1N1 vaccine, which it hopes to have ready early in the fall, and there are no major news events related to its patent expiring that could hurt the stock dramatically. Weiss has a buy recommendation on the stock and a price target of 58 Swiss francs.Novartis shares have underperformed both the DJ Stoxx European pharma index and the Swiss blue-chip index this year.The Basel-based firm now trades at about nine times forecast 2010 earnings, a premium to some of Europe’s other big drugmakers like AstraZeneca and Sanofi-Aventis, but a discount to local rival Roche Holding, which has less exposure to generic competition.On Thursday the top producers of treatments for the H1N1 virus, Sanofi Aventis
and GlaxoSmithKline
, were on the rise on Thursday.
Thomson Reuters contributed to this article.