Jefferies downgraded Novartis due to near-term concerns, but remains optimistic about long-term potential.

From Investing.com: 2024-09-03 03:07:06

Analysts at Jefferies have downgraded Novartis to “hold” from “buy”, citing near-term performance concerns despite long-term potential. With a 20% stock price increase this year, Jefferies believes current levels reflect much of the upside. Price target lowered to CHF105, hinting at limited 3% potential upside. Delayed market optimism for new product launches contributes to the revised outlook.

Jefferies’ downgrade factors in expected delays in garnering market enthusiasm for Novartis’ upcoming products like Scemblix, Pluvicto, and Fabhalta. The analysts highlight a timeframe until 2025 for approvals and ramp-ups to drive wider optimism beyond 2030. The delay tempers near-term prospects despite projected long-term growth.

Jefferies maintains optimism on Novartis’ long-term sales and profit trajectory, although near-term growth projections for 2024-2026 are viewed as modest. The analysts foresee slight upside post-recent upgrades, with approvals and launches needing time for broader market belief.

Surveying U.S. doctors on Scemblix’s potential for treating chronic myeloid leukemia, Jefferies anticipates significant market penetration by 2029. While initial feedback is positive, further proof of effectiveness may slow adoption, impacting near-term expectations. Uncertainty persists for Pluvicto’s full commercial potential amid challenges in patient access and treatment approvals.

Despite the downgrade, Jefferies predicts Novartis will exceed market expectations by 2030 due to key products like Scemblix, Pluvicto, Fabhalta, Kisqali, and Cosentyx. These drugs are anticipated to drive substantial growth, solidifying Novartis’ presence in the pharmaceutical sector.



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