Novartis Ag Stock Earnings Reports

Novartis reported a solid Q3 2025: net sales +7% and core operating income +7% (core margin 39.3%), with very strong free cash flow (US$6.2bn in Q3; US$16bn YTD). Growth was driven by priority brands and launches—Kisqali, Kesimpta, Pluvicto, Leqvio, Scemblix and Fabhalta led the quarter (many with double‑digit growth and strong market share gains). Key clinical and regulatory milestones: FDA approval of Rhapsido (oral BTK for CSU), positive Phase III results for ianalumab in Sjögren’s (two pivotal studies met primary endpoints), Pluvicto PSMAddition positive (28% reduction in progression/death; global submissions planned), Kisqali five‑year data showing recurrence risk reduction, positive Cosentyx data in PMR, and renal program wins (Fabhalta eGFR data, APPLAUSE‑IgAN eGFR slope improvement). Cosentyx performance was mixed in Q3 due to a one‑time rebate/price accounting adjustment (RD adjustment ~US$74m); excluding that, Cosentyx grew ~4% CC. Management reaffirmed full‑year 2025 guidance: high single‑digit net sales growth and low‑teens core operating income growth. Currency impact is modest. Novartis reiterated capital return priorities (new US$10bn buyback through 2027, continued dividend) and reiterated a strong M&A pipeline: proposed acquisition of Avidity raises their 2024–29 sales CAGR from 5% to 6%, but is expected to cause short‑term core margin dilution (~1–2 percentage points over the next 3 years) with a return to ~40% margin by 2029. Management expects 2026 to be a year of two halves (near‑term pressure from generic entry—notably Entresto—and prior‑period gross‑to‑net true‑ups), but remains confident in mid‑ to long‑term growth and pipeline execution. Investor takeaways: strong underlying commercial momentum across several growth brands, robust cash generation and shareholder returns, important late‑stage/launch catalysts coming (analyses and management events Oct–Nov), and a tradeoff from the Avidity deal of near‑term margin dilution for longer‑term growth upside.