On Wednesday, Morgan Stanley (NYSE:MS) initiated coverage on Novartis (SIX:NOVN:SW) (NYSE: NVS) with an Underweight rating and set a price target of CHF91.00. The research firm pointed to a relative Underweight due to what it considers well-recognized near-term growth prospects and a quieter year in terms of innovation for the pharmaceutical company.
According to Morgan Stanley, the focus of discussion is likely to remain on Novartis’ post-2029 outlook and the trajectory of growth through various significant loss of exclusivity (LOE) events anticipated between 2029 and 2035. The analysts cited a lack of major catalysts in 2025 and a valuation they perceive as high, suggesting that there may be more advantageous risk-reward opportunities available elsewhere in the market.
The research firm also noted potential earnings upside risks for Novartis in 2025, which could stem from delays in LOE events, such as for the heart failure drug Entresto, or from more effective performance in markets outside the United States or a stronger tail portfolio. However, Morgan Stanley believes that the market is less likely to reward these factors.
Looking ahead to potential significant developments for Novartis in 2025, the most noteworthy catalysts identified by Morgan Stanley include the PTC518 Phase 2b data in Huntington’s disease, which is expected in the second quarter of 2025 and could potentially lead to a filing in a best-case scenario. Additionally, Phase 3 data for ianalumab in Sjogren’s syndrome is anticipated in the third quarter of the year. These events could influence the company’s performance and investor sentiment.
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