GET DAILY SIGNALSNovartis (NVS) Achieves +4% Sales Growth in Q3, Raises Full-Year Guidance
Key Takeaways
- Novartis reported third-quarter 2026 net sales of $14.52 billion, up 4% year over year on both a reported and constant-currency basis.
- Core earnings per share (EPS) rose 9% to $2.46, while core operating income climbed 11% to $6.04 billion, driven by margin expansion.
- Reported (IFRS) net income fell 70% to $1.20 billion, weighed down by a $1.9 billion impairment charge tied to the del-desiran drug candidate.
- Novartis raised its full-year 2026 core operating income guidance, now expecting it to be in line with or grow a low single-digit percentage, versus a prior forecast of a low single-digit decline.
- Growth brands including Kisqali, Kesimpta, Scemblix, and Leqvio more than offset continued generic competition against Entresto.
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Why This Quarter Carries Extra Weight
Novartis's third-quarter update carried outsized weight for investors because it tested whether the company's newer medicines could offset the heavy revenue losses from Entresto, its former blockbuster heart-failure drug now facing generic competition. The quarter also arrived after a late-stage clinical setback for del-desiran, an experimental treatment for myotonic dystrophy type 1, which forced a large impairment. Against that backdrop, management's decision to raise full-year profit guidance signaled confidence in the durability of the company's growth portfolio and productivity efforts, even as reported earnings reflected the one-time write-down. I checked this using Tickeron’s AI Screener to see how NVS compares to others in the industry.
Breaking Down the Reported Results
Novartis delivered net sales of $14.52 billion for the third quarter of 2026, a 4% increase from $13.91 billion a year earlier. Volume growth contributed 14 percentage points, while generic competition subtracted 9 percentage points. Core operating income rose 11% to $6.04 billion, and the core operating income margin expanded 2.3 percentage points to 41.6%. Core EPS increased 9% to $2.46, above analyst expectations.
On a reported (IFRS) basis, results were far weaker. Net income fell 70% to $1.20 billion, and reported EPS declined 69% to $0.63. The drop stemmed primarily from a $1.9 billion partial impairment of the del-desiran in-process research and development (IPR&D, the value of a drug still in clinical testing) asset after the candidate missed its primary endpoint in a Phase III trial, along with higher research and development expenses and interest costs.
Free cash flow declined 18% to $5.1 billion. Management raised its full-year 2026 core operating income outlook to a range of in line to low single-digit growth, while maintaining its expectation for low single-digit net sales growth.
Market Reaction and Investor Sentiment
Investor sentiment around the report focused on the contrast between Novartis's strong underlying performance and its sharply lower reported profit. The raised full-year core operating income guidance was well received, as it indicated that margin gains and productivity measures were outweighing generic headwinds. However, the $1.9 billion del-desiran impairment and an 18% decline in free cash flow tempered enthusiasm. In early trading following the release, shares moved modestly higher, reflecting a market that largely looked past the one-time charge and emphasized the company's upgraded profit outlook and the momentum of its growth medicines.
Forward Outlook and Key Factors to Monitor
Following the third-quarter update, investors are likely to focus on whether Novartis can sustain the volume growth that has powered its recent sales increases. The company's priority brands are central to that story. Kisqali, a breast cancer treatment, grew 37% at constant currencies, while multiple sclerosis therapy Kesimpta rose 22%. Scemblix, a leukemia medicine, climbed 67%, and the cholesterol-lowering drug Leqvio grew 63%. These products will need to keep compensating for ongoing erosion from Entresto and other products facing generic rivals. From what I see, the margin trajectory remains another key factor, with the core operating income margin now at 41.6% reflecting both sales mix and cost discipline.
On the pipeline front, the del-desiran setback highlights the inherent risks of drug development, but management also pointed to positive late-stage data for remibrutinib in relapsing multiple sclerosis and several regulatory submissions and approvals. How these programs progress will shape the company's mid- and long-term growth narrative, alongside cash-flow trends and capital-allocation decisions. I’m watching this closely for any updates on the growth brands.
AI Tools in My Research Workflow
In my own analysis, Tickeron’s AI Screener helps surface comparable names and monitor technical conditions across the pharmaceutical sector. It allows quick filtering by fundamentals, patterns, and signals, which proved useful when reviewing NVS alongside peers after this earnings release. The tool supports more efficient idea generation without replacing core fundamental review.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
NVS's MACD Histogram just turned positive
The Moving Average Convergence Divergence (MACD) for NVS turned positive on September 24, 2026. Looking at past instances where NVS's MACD turned positive, the stock continued to rise in 32 of 45 cases over the following month. The odds of a continued upward trend are 71%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 14, 2026. You may want to consider a long position or call options on NVS as a result. In 47 of 81 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 58%.
NVS moved above its 50-day moving average on October 15, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for NVS crossed bullishly above the 50-day moving average on October 22, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 11 of 16 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 69%.
Following a +1.71% 3-day Advance, the price is estimated to grow further. Considering data from situations where NVS advanced for three days, in 184 of 336 cases, the price rose further within the following month. The odds of a continued upward trend are 55%.
The Aroon Indicator entered an Uptrend today. In 157 of 318 cases where NVS Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 49%.
Bearish Trend Analysis
The 10-day RSI Indicator for NVS moved out of overbought territory on October 23, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 37 similar instances where the indicator moved out of overbought territory. In 20 of the 37 cases, the stock moved lower in the following days. This puts the odds of a move lower at 54%.
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 8 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where NVS declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 45%.
NVS broke above its upper Bollinger Band on October 20, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron Profit vs. Risk Rating rating for this company is 6 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 61, placing this stock better than average.
The Tickeron PE Growth Rating for this company is 22 (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is 33 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of 46 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (7.037) is normal, around the industry mean (-2.810). P/E Ratio (23.060) is within average values for comparable stocks, (21.105). Projected Growth (PEG Ratio) (3.441) is also within normal values, averaging (5.738). NVS has a moderately high Dividend Yield (0.123) as compared to the industry average of (0.040). P/S Ratio (4.715) is also within normal values, averaging (4.033).
The Tickeron Price Growth Rating for this company is 47 (best 1 - 100 worst), indicating fairly steady price growth. NVS’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
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a manufacturer of health care and nutritional products
Industry PharmaceuticalsMajor
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