Novartis share price up on $5 billion stock buyback

Swiss drugmaker catching up to Pfizer with breast cancer drug

Novartis share price up on $5 billion stock buyback Friday, November 22: Swiss drugmaker Novartis (NOVN) excited investors today after it announced a $5 billion (₤3.09 billion) share buyback programme and said it would expand in fast-growing areas such as skin treatments and heart disease. Shares in the company jumped by more than two percent to 73.85 Swiss francs on the announcement.

The share repurchase will begin immediately, the Basel-based company said in a statement before its annual investor day today. Novartis will also look to develop new business segments in heart failure, dermatology, respiratory illness and cell therapy.

Trade these shares now through Hargreaves Lansdown from £5.95 per deal.

“Novartis has reached an inflection point, having fully integrated Alcon and reduced debt,” said chief executive officer Joseph Jimenez. “We are now further sharpening the execution of our strategy to strengthen shareholder value through science-based innovation in high-growth segments of health care where we have the global scale, competitive advantage and the right capabilities to win.”

Industry observers expected that Novartis might use Friday’s event to reveal whether it planned to divest from parts of its business. But the drugmaker gave no indication of such intentions and instead said it would continue to work towards reducing costs. Novartis wants to save three to four percent of total sales over the next two years by concentrating on procurement, reviewing its manufacturing facilities and consolidating research sites. The company delivered $56.7 billion (₤35 billion) in revenue last year.

Novartis catching up to Pfizer with breast cancer drug

Novartis is catching up to Pfizer in developing a promising new type of breast cancer drug that analysts believe could bring in billions of dollars in annual revenue.

The Swiss drugmaker, which had kept its research programme hidden, revealed today that its experimental pill LEE011 was set to enter final-stage Phase III clinical trials next month. Pfizer’s drug palbociclib is already in Phase III testing, but Novartis’ rapid progress means the US group could face competition earlier than anticipated.

Bernstein analyst Tim Anderson was quoted by Reuters as saying that Novartis has stealthily accelerated its development programme and “snuck up from behind”. "Investors should therefore be aware that palbociclib could face competition sooner than anticipated," the analyst wrote in a research note.

Analysts on Novartis

Société Générale raised its price target on Novartis’ shares to 87 Swiss francs from 85 Swiss francs in a note today. The bank has a ‘buy’ rating on the shares.

One investment analyst rates Novartis as a ‘sell’, four give it a ‘hold’ rating and four assign the shares a ‘buy’ rating. The company has a consensus rating of ‘hold’.

As of 09.39 UTC buy Novartis shares at 73.80 Swiss francs.

As of 09.39 UTC sell Novartis shares at 73.75 Swiss francs.

Trade these shares now through Hargreaves Lansdown from £5.95 per deal.

Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.

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