Novartis shares fell 10.1% in early Tuesday trading to 112.70 Swiss francs, extending a 3.2% decline from Monday. The drop was the steepest one-day loss in six years, dating to the start of the pandemic. The stock remained 3% higher since the start of the year.
The selloff followed two setbacks in projects that had been expected to generate billions in revenue. On Friday, Novartis said Pelacarsen reduced lipoprotein(a) levels in the blood as expected but did not lower the risk of major cardiovascular events, including heart attacks and strokes, compared with placebo. On Tuesday, the company said Del-desiran failed to meet its primary endpoint in a muscular disease.
Vontobel analyst Stefan Schneider called the Del-desiran result the second major setback for Novartis. He said he was not changing his combined peak sales estimate of $2.25 billion, with a 60% risk adjustment, for the other two therapies acquired from Avidity, but said the news had not strengthened his confidence. Schneider had cut his price target from 130 to 128 francs on Monday and lowered it further to 125 francs on Tuesday, maintaining a Hold rating.
Jefferies also maintained a Hold rating, with a price target of 110 francs. Analyst Michael Leuchten said management's growth targets beyond 2030 were likely to be seen as unattainable without further mergers and acquisitions. He noted that Novartis was trading at a price-to-earnings ratio above 16 for 2027, while the sector was below 13 times, and expected the multiple to come under pressure.
Zürcher Kantonalbank cut its fair value estimate for Novartis to 113 francs from 117 francs and kept a Market Weight rating. Analyst Urban Fritsche said the setbacks were likely to weigh on confidence in the AOC franchise, including del-brax and del-zota, even though other programs had remained clinically positive.
Morgan Stanley analyst Thibault Boutherin took a less negative view, although he had expected a clear negative price reaction. He said it was unlikely the drug would be approved without a new Phase 3 study by Novartis, possibly with a different primary endpoint. He considered a forecast increase at the upcoming capital markets day highly unlikely and maintained an Overweight rating with a 135-franc price target.
