Novartis, the Swiss pharmaceutical company, experienced a sharp increase in its stock price during early trading on Tuesday. This surge came after the company announced a higher full-year outlook and unveiled plans for a substantial $15 billion share buyback.
Citing robust margin expansion and strong sales in the second quarter, Novartis raised its profit outlook significantly. The company now anticipates core operating income to grow by a low-double-digit percentage, surpassing its previous forecast for high-single-digit growth.
Novartis has committed to completing its share buyback program by the end of 2025. This decision comes after the successful conclusion of its previous program in June. The company highlighted its robust balance sheet and projected future growth as the driving factors behind the share buyback. Additionally, Novartis expressed its intention to maintain flexibility for strategic bolt-on acquisitions.
In another strategic move, the board has given its endorsement for the spin-off of Sandoz, Novartis’ generic medicines unit. Assuming shareholder approval, the spin-off is set to take place early in the fourth quarter.
The company’s second-quarter sales reached $13.6 billion, showing impressive growth of 9%. This exceeded analysts’ estimates of $13.5 billion, according to FactSet. Core earnings per share also surpassed expectations at $1.83, compared to the projected $1.73.
As a result of these achievements, Swiss-listed shares of Novartis rose more than 3% immediately after the market opened. Overall, the stock has recorded a 4.5% increase in value thus far in 2023.