Novartis lifts full-year outlook after 9% third-quarter sales growth

Novartis raised its full-year expectations after a stronger third quarter, giving investors a clearer signal that the Swiss drugmaker’s business is running ahead of its earlier plan. The company said sales rose 9% in the quarter to $12.82 billion, while core earnings per share climbed 18% to $2.06.

The upgrade covers two key numbers Wall Street watches closely: sales growth and core operating income growth. Guidance is a company’s own forecast for future results, and when a company raises it, management is saying current trends support a better outcome than previously expected.

Novartis now expects sales to grow in the low double digits for the year. Its prior outlook called for growth in a range from the high single digits to low double digits. In plain English, the company moved from a wider range that included high single-digit growth to a firmer expectation around the low teens area.

The company also lifted its forecast for core operating income growth to the high teens. Previously, Novartis expected that measure to grow in the mid-to-high teens. Core operating income is a company-adjusted profit measure that focuses on earnings from operations before certain items, and investors use it to judge how the underlying business is performing.

Core earnings per share, another company-adjusted measure, increased to $2.06 in the third quarter, according to Novartis. Earnings per share measures profit allocated to each share, which makes it easier for investors to compare profitability across periods.

What changed in the outlook

• Novartis said third-quarter sales increased 9% to $12.82 billion.

• Core earnings per share rose 18% to $2.06, according to the company.

• Full-year sales growth is now expected in the low double digits, up from the previous high single-digit to low double-digit range.

• Core operating income growth is now expected in the high teens, compared with the prior mid-to-high teens forecast.

For everyday investors, the guidance change is the headline because it updates expectations for the rest of the year, not just the quarter that already ended. A revenue beat or profit increase can be backward-looking, but an outlook raise tells the market management sees enough strength in the business to lift its own targets.

Novartis shares listed in Switzerland were shown down 0.02% in MarketWatch data tied to the report. The small share move does not change the main takeaway from the company’s update: Novartis reported higher third-quarter sales and profit on a core basis, then raised its full-year targets for both sales and core operating income.

This story draws on original reporting from MarketWatch.