Novartis AG (VTX:NOVN) First-Quarter Results: Here's What Analysts Are Forecasting For This Year

Investors in Novartis AG (VTX:NOVN) had a good week, as its shares rose 3.6% to close at CHF91.35 following the release of its first-quarter results. It was a workmanlike result, with revenues of US$13b coming in 2.8% ahead of expectations, and statutory earnings per share of US$1.09, in line with analyst appraisals. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Novartis

Taking into account the latest results, the consensus forecast from Novartis' 19 analysts is for revenues of US$53.4b in 2023, which would reflect a satisfactory 2.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 38% to US$4.62. In the lead-up to this report, the analysts had been modelling revenues of US$52.3b and earnings per share (EPS) of US$4.58 in 2023. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.

It may not be a surprise to see thatthe analysts have reconfirmed their price target of CHF94.28, implying that the uplift in sales is not expected to greatly contribute to Novartis's valuation in the near term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Novartis at CHF108 per share, while the most bearish prices it at CHF80.18. This is a very narrow spread of estimates, implying either that Novartis is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Novartis' past performance and to peers in the same industry. The analysts are definitely expecting Novartis' growth to accelerate, with the forecast 3.1% annualised growth to the end of 2023 ranking favourably alongside historical growth of 2.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.0% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Novartis is expected to grow slower than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Novartis analysts - going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Novartis you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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