On Friday, BMO Capital initiated coverage on shares of Novartis AG (SIX:NOVN) (NYSE:NVS), assigning a "Market Perform" rating and setting a price target of $114.00. The firm's evaluation of the company comes after Novartis' recent move to spin off its Sandoz (SIX:SDZ) division, which is anticipated to streamline its operations and potentially bolster long-term growth prospects.
According to the analyst from BMO Capital, despite projecting sales growth that surpasses the company's own mid-term guidance for the 2023-2028 period, the new price target suggests only a slight increase from the current stock price. This conservative outlook is based on the present visibility into the competitive landscape for Novartis' key products, which include Kesimpta, Kisqali, and Pluvicto.
The firm notes that a more optimistic stance on Novartis could emerge with clearer insights into the market dynamics affecting these core products. Additionally, a successful outcome from the clinical study of pelacarsen, expected in 2025, could significantly enhance Novartis' market position. Pelacarsen is being developed to address high lipoprotein(a) levels, and a positive trial result could provide Novartis with a first-mover advantage in this market.
The analyst's statement emphasizes the potential for Novartis to secure a lead in the promising Lp(a) market should pelacarsen's data readout be favorable. This development could serve as a catalyst for reevaluation of the company's stock in the future.
Novartis' strategic focus post-Sandoz spinoff appears to be on strengthening its portfolio of medicines and capitalizing on innovative treatments that could drive growth.
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