The Novartis share price falls to a 7-month low with lower sales.

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Novartis reported an 8% increase in core net income to $3.47 billion, higher than the consensus of $3.32 billion
Revenue climbed 1% to $12.3 billion, but was still below the $12.7 billion estimate
Shares fell by about 3.7% on Tuesday, reaching 73.35 to return to March lows

Novartis (SIX: NOVN) shares fell nearly 4% on Tuesday after the Swiss pharmaceutical company reported lower than expected third-quarter sales.

Fundamental analysis: higher earnings, lower sales

Novartis raised its operating profit outlook on Tuesday based on predictions that healthcare systems would handle the second wave of coronavirus better than the first.

The drug company estimated moderate double-digit growth in operating profit in 2020 compared to the previous forecast, which predicted a low double-digit rate. Novartis expects mid-single-digit sales growth, in line with the earlier forecast.

The company reported core net income rose 8% to USD 3.47 billion compared to consensus estimates of USD 3.32 billion in a refinitive survey. Sales rose 1% to USD 12.3 billion, below the USD 12.7 billion estimate.

Vas Narasimhan, CEO of Novartis, warned that challenges caused by corona viruses still have the potential to sabotage the 2020 targets. However, he also said healthcare systems had learned from past mistakes during the first wave, which had led to a postponement of treatment and affected sales of Novartis medicines.

“Health systems have recognized the impact of the pandemic on the health care system. on noncommunicable diseases and general prevention and preparedness measures,” he said.

“There is a strong desire not to repeat this.

The drug company has been able to increase profitability through a strategy that has included thousands of vacation trips and has sold over a dozen factories since last year.

Severin Schwan, CEO of Roche, said he does not believe that we will face another health freeze despite the resurgence of coronavirus infections. The company had already lowered its sales forecast for 2020 in July due to the coronavirus crisis.

Technical analysis: Return to pandemic level

Despite the Company’s claims that market conditions recovered in the third quarter, the Novartis share price does not appear to be in a mood to move forward. The shares fell about 3.7% on Tuesday, reaching 73.35 to return to the lows seen in March.

Novartis Stock Chart (Trading View)

A daily closing below the 75.00 limit would give the selling side control over the price action. In this case, they are likely to target 72.60 as their next target on the downside.

Summary

Despite the increase in operating profit estimates and higher net income, Novartis sales fell short of market expectations to reduce inventory by almost 4%.

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