Novartis’s Sandoz Sets Out Growth Plan Following Proposed Spinoff
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Novartis’s off-patent medicines division Sandoz set out its growth plans as a standalone company following the proposed spinoff, saying it is well positioned to continue delivering mid-single digit sales growth. With an increase of 1.0 per cent, Novartis performed markedly better than the European pharmaceutical sector (+0.1%). Ahead of its capital markets day on Thursday, Sandoz said it foresees mid-single digit net sales growth for the full year as well as for the 2024-28 period. The core earnings before interest, taxes, depreciation and amortization margin is expected at 18%-19% in 2023 and at 24%-26% in the mid term. An initial decrease from a core Ebitda margin of 21.2% in 2022 is due to inflation and investments required to stand as a separate company. Free cash flow is expected to more than double by 2028 from $800 million last year, Sandoz said. This would allow to pay a full-year dividend of 20%-30% of core net income in 2023 and 30%-40% in the mid term. The proposed spinoff of Sandoz is expected to occur in the second half of the year. Completion is subject to conditions.
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The Swiss stock market ended Thursday's trading session slightly lower. The SMI dropped by 0.3 per cent to 11,309 points. Among the 20 SMI stocks, there were 13 price losers and 7 price winners. 37.45 (previously: 36.44) million shares were traded. The daily winner in the SMI was the Holcim share with a plus of 1.6 per cent. Nestlé (-0.8%) and Roche (-1.4%) both recorded losses. Meanwhile, the two big banks CS (+0.1%) and UBS (-0.1%) were virtually unchanged. The CS shares will be removed from the SMI next week and will probably also be delisted. They will be replaced in the SMI by Kühne+Nagel (-0.7%). Zurich shares (-0.7%) were held back by speculation that one or two smaller company acquisitions could be imminent. Other insurers such as Swiss Re (-1.7%) and Swiss Life (-0.3%) also ended the day in negative territory. Swatch Group shares (-2.5%) were equally under pressure. Richemont (-0.6%) held up slightly better.
European stocks lacked momentum on Thursday as investors looked to next week's central bank meetings for policy decisions. The Stoxx Europe 600 index closed virtually unchanged at 460.7 points. In Paris, the CAC 40 and the SBF 120 both advanced by 0.3%. The DAX 40 gained 0.2% in Frankfurt. In London, by contrast, the FTSE finished down 0.3%. Statements at the Capital Markets Day sent Orsted shares up 5.1 per cent. The targeted annual EBITDA growth of 13 to 14 per cent until 2030, for example, is 6 percentage points above the consensus estimate, according to Bank of America. Conti advanced 1.9 per cent. BMW gained 1 per cent, VW 1.1 per cent and Daimler Truck 2.4 per cent. Wizz Air plummeted 4.4 per cent on the London Stock Exchange after its financial results. Thyssenkrupp continued to perform well in the market with gains of 1.8 per cent. As was announced the day before, Thyssenkrupp Marine Systems (TKMS) is to construct conventional submarines for the Indian Navy. After a buy recommendation, Evotec went up by 8.4 per cent. Citigroup believes the company could become the "Tesla of biologics manufacturers". The recently agreed collaboration with Sandoz for the development and production of biosimilars lends credibility to the company's strategy of focusing exclusively on biologics.
U.S. stocks rose Thursday, ending the S&P 500’s longest bear market since the 1940s and marking the start of a new bull run. The broad index powered higher over the past few months, in large part because of a handful of companies posting outsize gains. Many of those same stocks, including Amazon.com, Tesla and chip maker Nvidia, led the market’s advance Thursday. That helped propel the S&P 500 up 0.6%, allowing the index to finish up 20% from its October low. The Nasdaq Composite climbed 1% and the Dow Jones Industrial Average rose 0.5% to 33833. Among individual stocks, electric-car maker Tesla jumped 4.6% to $234.86, posting its 10th straight session of gains. That marked the company’s longest winning streak since an 11-session run that ended in January 2021, according to Dow Jones Market Data. Carvana, the online used car retailer, rose 56% to $24.23 after saying it expects its profit to jump in the second quarter. GameStop plunged 18% to $21.44 after the videogame retailer fired its CEO, Matt Furlong, and appointed board member Ryan Cohen as its new executive chairman.
In Asia, major indexes broadly closed with gains on Friday. Tokyo is the clear leader with a plus of 2.0 per cent to 32,261 points, also supported by the stronger dollar against the yen compared to the previous day. Seoul is up 1.0 per cent. The stock exchanges in Shanghai and Hong Kong show smaller gains, after they had already recorded small profits the previous day in contrast to the other markets, supported by speculation about a looser monetary policy in China. The latter was fuelled at the end of the week by a slightly lower-than-expected inflation rate in China during May. At the same time, producer prices dropped again sharply and more markedly than economists had anticipated, namely by 4.6 per cent.
U.S. Treasury yields fell Thursday after new jobless claims showed the number of people who applied for unemployment benefits in early June jumped to a nearly two-year high, while investors reassessed Federal Reserve policy trajectory following unexpected interest-rate rises by central banks in Australia and Canada. The 10-year Treasury note yield eased by 8 basis points to 3.718%, after having jumped by 13 basis points on Wednesday. The 2-year Treasury note yield fell by 4 basis points to 4.529%, after climbing by 7 basis points on Wednesday.
Barry Callebaut price target: Barclays lowers to 2040 (2075) Fr. - Equal Weight
Target price Ems-Chemie: Berenberg upgrades to 640 (600) Fr. - Hold
CS lifts Inditex target to EUR 28.50 (26) - Underperform
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