Tech stocks have made big V-shaped rebounds five times in 30 months — and now Deutsche Bank forecasts another bounce
Positioning among equity investors in tech stocks is consistent with much slower earnings growth than the sector is achieving. Deutsche Bank thinks it’s time to go overweight once again as the risk-reward profile favors a sector that is suddenly out of fashion.
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.
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