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Novartis Stock Sputters After Big Acquisition

Novartis (NYSE:NVS) is a Switzerland-based company that researches, develops, manufactures, and markets healthcare products in Switzerland and around the world. Shares of this healthcare stock have dropped 4.7% month-over-month as of close on Thursday, February 9, 2024. The stock has climbed 24% in the year-over-year period.

Earlier this week, Novartis announced that it had acquired MorphoSys for $2.9 billion. MorphoSys is a German biopharmaceutical company that has garnered attention for the development of cancer treatments. Indeed, the company’s main revenue generator is a lymphoma drug called Monjuvi. In the final week of January, this drug reported net product sales that were valued at $92 million for the full year. The company expects sales between $80 million and $95 million. MorphoSys had said that it expected revenue to grow steadily as it is approved.

The acquisition will significantly bolster Novartis’ cancer drug portfolio. Novartis released its fourth quarter (Q4) fiscal 2023 on January 31, 2024. In Q4 FY2023, net sales increased 10% compared to the previous year. Meanwhile, for the full year, Novartis posted net income growth of 62% and free cash flow from operations of US$13.2 billion – up 9% compared to the prior year. Core earnings per share (EPS) climbed 25% from the full year in 2022 to US$6.47.

Shares of Novartis are trading in favourable value territory compared to its industry peers. Moreover, this healthcare company boasts a fantastic balance sheet at the time of this writing.