Novartis 2Q Profits Are Expected to Flatline -- Earnings Preview

Features Dow Jones Newswires

Novartis AG reports its second-quarter results on Tuesday. Here's what to expect.

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EARNINGS: Analysts surveyed by FactSet expect Novartis to report that net income flatlined at $1.83 billion, compared with the $1.81 billion posted a year earlier.

REVENUE: Novartis is expected to say sales fell 1.7% to $12.26 billion.

WHAT TO WATCH:

ALCON: In January, CEO Joe Jimenez said he was considering a spin-off or sale of the company's ailing eyecare unit Alcon amid frustrated efforts to turn that business around. He promised a decision by the end of the year.

GLEEVEC PATENT CLIFF: Declining sales of Novartis's one-time blockbuster cancer drug Gleevec, which now faces competition from cheaper versions, will dent overall sales and profit in the second quarter.

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CAR-T: The unanimous backing of Novartis's first-of-its kind cell therapy for an aggressive form of leukemia by a panel of experts has made the treatment's eventual approval by the FDA agency almost certain. Now, investors' minds will turn to how the drug maker will price its breakthrough therapy.

NEW DRUGS: Novartis is plowing heavy investment into the launches of two key new drugs. Cosentyx, for psoriasis and other inflammatory conditions, is now its fastest-growing product. Entresto for heart failure has taken longer to ramp up, but management holds out hope that it will become a multi-billion dollar drug.

ACZ885: Novartis recently learned that a drug that it sells for a number of rare diseases, under the brand name Ilaris, could also be used to treat people who have suffered a heart attack. But management has not yet signalled whether it will pursue marketing approval for this much broader use, as doing so would require a big price cut.

CURRENCY IMPACT: Novartis expects the strength of the dollar to hurt its reported net sales by 2 percentage points, and its core operating income by 3-4 percentage points in the second quarter.

Write to Denise Roland at Denise.Roland@wsj.com

(END) Dow Jones Newswires

July 14, 2017 06:07 ET (10:07 GMT)