Earnings Beat: Novartis AG Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

As you might know, Novartis AG (VTX:NOVN) recently reported its quarterly numbers. Revenues were US$13b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.83 were also better than expected, beating analyst predictions by 11%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Our free stock report includes 1 warning sign investors should be aware of before investing in Novartis. Read for free now.

Taking into account the latest results, Novartis' 17 analysts currently expect revenues in 2025 to be US$54.0b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 4.2% to US$6.84. In the lead-up to this report, the analysts had been modelling revenues of US$53.4b and earnings per share (EPS) of US$6.52 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Novartis

The consensus price target was unchanged at CHF99.20, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Novartis at CHF116 per share, while the most bearish prices it at CHF78.01. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Novartis shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Novartis' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 2.2% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 0.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.4% per year. So although Novartis' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Novartis' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CHF99.20, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Novartis analysts - going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign 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.