Novartis Will Hit $100 This Year

There are a lot of moving parts going on in Novartis AG (ADR)(NYSE:NVS) at present, but I still see strong growth coming down the track. The company announced its second-quarter earnings this week where the surprise was definitely the growth of the company's Alcon division. Alcon has been earmarked for either a sale or a spin-off for many months now, but its recent unexpected growth has left management very tight-lipped about its future plans. Investors on the earnings call looked for any clues on Alcon's forward looking fundamentals with respect to the segment's recent healthy margins. Growth in Q2 definitely came as a respite as the company in recent quarters has had to rely on product launches to stem losses from Alcon as well as Gleevec.

Existing drugs such as Entresto and Cosentyx performed very well in the quarter. In fact initial sales targets of $500 million for Entresto and $2 billion for Cosentyx still look on the cards for this fiscal year. Novartis' share price trajectory, though, (which we continue to hold in our portfolio) will come down to whether its attractive pipeline can fulfill its potential. The Sandoz generics division looks like it will continue to face strong pricing pressure headwinds in the US. We all are expecting growth from next year on, but the question is by how much? I still see this stock undervalued. Here are some reasons why.

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