Novartis: Resilient Core Earnings, Conservative Guidance and Robust Pipeline Support Buy Rating and EPS Upside to 2030

Citi analyst Graham Parry maintained a Buy rating on Novartis AG today and set a price target of CHF133.00.

Graham Parry has given his Buy rating due to a combination of factors that, in his view, support an attractive medium‑term earnings trajectory despite near‑term conservatism in guidance. Novartis delivered 2025 core EPS broadly in line with market expectations, with a slight top-line shortfall offset by better‑than‑forecast operating margins, indicating solid underlying profitability. Key growth drivers such as Cosentyx and Pluvicto exceeded expectations, supported by strong volume trends and expanding use in earlier treatment settings, which helps underpin confidence in future revenue growth. While headline EPS guidance for 2026 appears 4–5% below consensus, Parry interprets this as cautious, noting that it incorporates contributions like Avidity that may not be fully reflected in market models and that management has a track record of guiding conservatively and then upgrading through the year.
At the same time, the report highlights that several product shortfalls, notably in Entresto and Promacta, were driven by gross-to-net and channel mix factors that should ease as the year progresses, rather than signaling a deterioration in end‑market demand. Kisqali’s reported sales missed expectations due to revenue deductions, yet underlying prescription and volume growth remained very strong, reinforcing the case for sustained oncology momentum. Although pipeline timelines for Pelacarsen and Abelacimab have been pushed back, Parry sees no reduction in their ultimate peak sales potential, which preserves the long‑term growth narrative. Overall, he concludes that the combination of resilient core earnings, conservative guidance, and a robust late‑stage pipeline implies 2030 EPS could sit materially above current consensus, justifying a Buy recommendation on Novartis shares.

In another report released today, Bank of America Securities also maintained a Buy rating on the stock with a CHF130.00 price target.