Novartis AG (ADR) (NYSE:NVS) Likely to Recover From Headwinds

May 5, 2017

Portfolio Manager Donald Woodley of Woodley Farra Manion Portfolio Management says that while Novartis AG (ADR) (NYSE:NVS) has had challenges in its eye care and generics divisions, it is a solid company that should recover from its out-of-favor status.

Novartis (NYSE:NVS) has kind of hit some hard times, which makes us interested in that one. They’ve got a division called Alcon, their eye care division that they bought a few years back, that has been a big drag on them, and we look for them to sell that.

And then, additionally, they’ve got some drugs that have come off patent, and we see some new drugs that are coming out and are making their way up the ladder to become large drugs. And so we see them as a potential. They pay a dividend that’s in the 3.5% range these days.

…the government is investigating all of the generic drugmakers for collusion on pricing, and Novartis owns Sandoz, so that’s a generic drugmaker. And so that division as well as their Alcon division have been drags on the company, but the likelihood is that their market will eventually start ignoring that aspect after they punish them enough and see the value in the rest of the company, and that should come around.