Analyst Cuts Price Target on Novartis (NVS)

By Carrie Williams

Novartis logoChardan Capital Markets analysts, led by Gbola Amusa, released this morning their research report on Novartis AG (NYSE: NVS) reducing their price target of $95 on the company.
Chardan’s analysts expressed their concern about the company’s revenues following a study that was published this week, suggesting that Novartis’ LEE011 has significant side effects.

The company’s breast cancer treatment LEE011 (ribociclib) Phase 3 clinical trial results were presented this week at the European Society for Medical Oncology 2016 Congress that was held in Copenhagen. While the treatment showed positive results in tumor reduction as well as showed a reduce in the risk of death or the cancer progression, it raised liver safety signals as one of its main side effects.
According to Chardan, this is especially concerning as its competitor, Pfizer’s IBRANCE (palbociclib), has produced similar treatment with solid phase III efficacy and safety results without significant liver toxicity issues.

As the Healthcare analyst, Gbola Amusa, explains:

“Due to liver safety concerns for LEE011 disclosed in the NEJM, which have not been seen for unrated Pfizer’s marketed CDK4/6 inhibitor, Ibrance, despite similar efficacy data. Accordingly, we now adjust LEE011 2022E revenues from $1.97bn to $0.00bn, which compares to consensus at $1.41bn. Removing LEE011 from our model drives our price target reduction.”

The firm still currently remains positive on NVS maintaining their Buy rating, while the price target was lowered from $95 to $92.

Novartis AG is based in in Basel, Switzerland and was founded on 1996. It develops, manufactures, and markets healthcare products. The company operates through segments such as: Pharmaceuticals, Alcon, Sandoz, and Corporate Activities, and offers a portfolio what consists of innovative medicine, eye care and cost-saving generic pharmaceuticals. There are approximately 118,000 full-time-equivalent associates employed by the group, and its products are available in over 180 countries worldwide.

According to TipRanks, based on the latest analyst recommendations on the Novartis the overall consensus rating on the company is Moderate Buy. The analysts’ average price target currently stands at $67.93, a 12.27% downside compared to its last close at $78.29.