Deutsche Bank downgrades Novartis to Sell from Hold

Deutsche Bank downgraded Novartis (NOVN) to 'sell' from 'hold', cutting its price target to CHF115 from CHF120. The bank cited the stock's recovery from failed drug trials and a 'somewhat mixed' third quarter. Novartis reported Q3 core EPS of $2.46, beating estimates, but revenue missed. The stock trades at a P/E of 31.11, 6% below its 52-week high.

Deutsche Bank downgraded Novartis (NYSE: NVS) to Sell from Hold, lowering its price target to CHF115.00 from CHF120.00, citing mixed Q3 results and high valuation. The stock has risen post-earnings, trading near its 52-week high with a P/E ratio of 31.11. Novartis reported Q3 core EPS of $2.46, beating estimates, but revenue was slightly below expectations at $14.52 billion. The company raised its profit outlook despite a significant impairment charge.

Merck, Eli Lilly, Novartis, and AstraZeneca allegedly paid millions in bonuses to Russian distributors, including R-Pharm, which faces corruption allegations. Whistleblower reports claim these payments may have facilitated kickbacks to officials for cancer drug contracts, potentially violating the U.S. Foreign Corrupt Practices Act. The companies have not publicly addressed the allegations.

Novartis reported a 61% drop in Q3 operating income, with $2.2B in charges due to drug trial setbacks. The company reduced the value of a muscle-wasting drug by $5.48B and wrote off a failed heart drug. Despite this, Novartis raised its 2026 profit outlook, citing strong demand for key drugs. Management affirmed its M&A strategy, expecting $20B+ in free cash flow by 2028.

October FDA approvals include Novartis' remibrutinib for dermographism, Teva's once-monthly olanzapine for schizophrenia, Genentech's satralizumab for thyroid eye disease, GSK's bepirovirsen for chronic HBV, and AbbVie's risankizumab for Crohn disease. Each approval offers new treatment options and was based on clinical trial data.

Deutsche Bank downgraded Novartis to Sell from Hold, citing mixed Q3 results and a $2.2B charge for failed drug trials. Analyst Emmanuel Papadakis reduced the price target to CHF115 from CHF120, noting concerns about patent protection for Kisqali and lack of key clinical events next year.