Novartis: Alcon's spin-off process launched and USD5bn SBB initiated
Novartis: (BUY-Top Picks, Fair Value CHF93 (+28%))Alcon's spin-off process launched and USD5bn SBB initiated
As we have been advocating in favour of Novartis, our current Top Pick in the healthcare sector, for a while we have emphasized two main arguments to support our investment thesis. The first was the strong impact on top-line growth but also on margins of the ongoing new product launch phase but the second was equally important and related to the corporate activities which would make Novartis a more focused and simplified organisation. After divesting the minority CHC stake to GSK, Novartis today officially launched the spin-off process of 100% of Alcon, which should be approved at the AGM in early 2019 and completed thereafter. A new leadership is being put in place. Separately, the group also announced today the implementation of a new share buy-back programme for up to USD5bn which will be financed more or less by the proceeds from CHC transaction net from AveXis acquisition (2% to 3% accretion on core EPS). We are reiterating our BUY recommendation on Novartis.
Novartis is a multinational healthcare group based in Switzerland. Co. provides healthcare solutions that address the evolving needs of patients and societies worldwide. Co.'s broad portfolio includes innovative medicines, eye care products and cost-saving generic pharmaceuticals. Co.'s operations are organized along three operating divisions: Innovative Medicines Division; Sandoz Division; and Alcon Division. Co.'s operations are supported by the Novartis Institutes for BioMedical Research and Novartis Business Services.
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