Novartis stock made a break for a buy point Tuesday after the Swiss drugmaker beat first-quarter expectations and raised its full-year outlook.
The guidance boost comes despite expected generic competition for heart-failure drug Entresto. Better-than-expected sales of breast cancer treatment Kisqali and spinal muscular atrophy gene therapy Zolgensma helped drive strong sales, Edward Jones analyst John Boylan said in a note.
"We believe investors will look upon this quarter favorably due to the good results, which we think were better than some peers," he said. "We were also impressed by Novartis's strong cost control this quarter, which helped results and should continue."
In response, Novartis stock advanced 0.7% to 113.44. Shares are consolidating with a buy point at 116.91, according to MarketSurge. Promisingly, Novartis stock is trading above its 50-day and 200-day moving averages.
Shares have a strong IBD Digital Composite Rating of 95. The 1-99 measure takes into account fundamental and technical metrics.
Novartis Stock: Massive Earnings Jump
The company reported total sales of $13.23 billion, up 12% on a strict, as-reported basis. Analysts called for a lower $13.08 billion in sales. Similarly, core earnings grew 27% to $2.28 a share, above forecasts for $2.11, according to FactSet.
In constant currency, sales increased 15% and earnings surged 31%.
As a result, Novartis raised its outlook for the year. The company now expects sales to grow at a high-single-digit percentage, with core operating income to advance by low double digits.
"Novartis is executing on its business strategy well since the split of its generic business not long ago," Boylan said. "We expect that to continue, but we also believe this outlook is reflected in the price of the shares."
He kept his hold rating on Novartis stock.
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