Deutsche Bank downgrades Novartis stock rating to sell on valuation

Deutsche Bank has reduced its rating on Novartis stock to Sell, citing valuation concerns, while maintaining a price target of CHF115.00. The downgrade comes after a mixed third quarter for the pharmaceutical company. Novartis shares have rebounded following setbacks with pelacarsen and delucemdostat, despite being supported by a market rotation into pharmaceutical stocks.

Analyst Emmanuel Papadakis noted the stock has largely regained earlier losses. Deutsche Bank believes market expectations are overly optimistic, with upcoming events like a Phase 3 trial for remibrutinib and a capital markets day expected to be modest positives. The stock currently trades at a P/E ratio of 31.11, just 6% below its 52-week high of $170.46, and is in overbought territory according to RSI indicators.

Novartis reported third-quarter earnings that beat expectations with a core EPS of $2.46, driven by strong sales of new medicines and cost control. However, revenue fell slightly short of forecasts at $14.52 billion. The company raised its profit outlook, despite a significant impairment charge from a failed drug trial.