Novartis 2025 Q1 Earnings Strong Performance as Net Income Surges 34%

Novartis, ranked 45th by market capitalization, reported its fiscal 2025 Q1 earnings on April 29th, 2025. The pharmaceutical company exceeded expectations with adjusted earnings per share of $2.28, surpassing the Street view of $2.10. Novartis also revised its guidance upward, now projecting high single-digit sales growth for the full year 2025, an increase from the previously anticipated mid to high single digits. Core operating income is expected to grow in the low double digits, reflecting the company's confidence in sustaining its strong performance.

Revenue

Novartis reported a total revenue increase of 11.9% to $13.23 billion in Q1 2025, up from $11.83 billion in the same quarter last year. The cardiovascular, renal, and metabolic segment contributed $2.52 billion, while the immunology segment added $2.41 billion. Neuroscience generated $1.30 billion, oncology brought in $3.91 billion, and established brands accounted for $3.10 billion, resulting in total net sales from continuing operations of $13.23 billion.

Earnings/Net Income

Novartis's earnings per share rose 39.7% to $1.83 in Q1 2025, up from $1.31 in Q1 2024, reflecting continued earnings growth. Net income surged by 34.3% to $3.61 billion from $2.69 billion in the previous year, showcasing strengthened profitability. This increase in EPS indicates a positive financial performance for the quarter.

Post-Earnings Price Action Review

The earnings report metrics showed positive but modest effects on Novartis's stock price, based on a backtest from April 29, 2020, to April 29, 2025. Revenue, net income, and EPS each had a 51.20% 3-day win rate, a 52.31% 10-day win rate, and a 51.91% 30-day win rate, indicating mixed market responses with a slight bias toward short-term optimism. Although earnings reports showed positive impacts, the effects were generally modest, with stock price movements of less than 2% in any direction shortly after earnings releases. The highest return observed was 1.91% over 30 days, occurring on day 79 after the earnings report. This suggests that while earnings reports influence stock prices, other factors likely play a more significant role in short-term movements.

CEO Commentary

Vas Narasimhan, CEO of Novartis, highlighted the company's strong Q1 2025 performance, crediting key products like Kisqali and Kesimpta for driving robust sales growth. He noted a 56% increase in Kisqali sales and acknowledged challenges from anticipated generic competition for Entresto. Narasimhan expressed confidence in Novartis’ strategic investments, particularly the $23 billion commitment to enhance U.S. manufacturing capacity, ensuring domestic production of key products. He conveyed an optimistic outlook, stating confidence in delivering the upgraded guidance despite the complex geopolitical environment.

Guidance

For the full year 2025, Novartis expects net sales to grow in the high single digits, an upgrade from its previous guidance of mid to high single digits. Core operating income is anticipated to grow in the low double digits, reflecting the company's confidence in sustaining momentum from strong product performance despite market challenges.

Additional News

Novartis has completed the acquisition of Anthos Therapeutics, a clinical-stage biopharmaceutical company, to expand its cardiovascular portfolio. The acquisition aligns with Novartis's growth strategy and expertise in the cardiovascular therapeutic area. Additionally, Novartis repurchased 24.8 million shares for $2.6 billion under the share buyback program announced in July 2023, with a total of $2.7 billion still to be executed. The company remains focused on striking a balance between business investment, maintaining a strong capital structure, and providing attractive shareholder returns. Furthermore, Novartis aims to mitigate the dilutive impact of equity-based compensation plans on its shares throughout the remainder of the year.