Novartis shares fell 10.1% to CHF 112.70 in early trading Tuesday, marking the steepest single-day decline since the onset of the coronavirus pandemic six years ago. The drop followed a 3.2% fall on Monday after the company reported that its experimental drug pelacarsen failed to reduce the risk of serious cardiovascular events such as heart attacks or strokes compared with a placebo, despite successfully lowering lipoprotein(a) levels as expected.
On Tuesday, Novartis announced that del-desiran also missed its primary endpoint in a muscle disease trial — the second major clinical setback within days and a blow to programs carrying potential billions in revenue. The stock remains up 3% year to date.
Analysts moved quickly to revise their views. Stefan Schneider at Vontobel cut his price target to CHF 125 from CHF 130, maintaining a Hold rating. While Schneider left his combined peak-sales estimate of USD 2.25 billion for the two other Avidity-acquired therapies unchanged, he noted the news undermined confidence and said management's growth targets beyond 2030 would likely be viewed as unachievable without further mergers and acquisitions.
Michael Leuchten at Jefferies also kept a Hold rating but set a target of CHF 110, warning that Novartis trades at a price-to-earnings ratio above 16 for 2027 while the broader sector sits near 13x, and he expects valuation pressure to follow.
Zurich Cantonal Bank analyst Urban Fritsche reduced his fair-value estimate to CHF 113 from CHF 117, reiterating a Market Weight rating. He flagged that the double setback could weigh on the entire AOC franchise — including del-brax and del-zota — even though those programs have performed positively in clinical trials so far.
Morgan Stanley's Thibault Boutherin was the most bullish holdout, keeping an Overweight rating and a CHF 135 target. However, he said it was unlikely the drug would win approval without a new Phase 3 study, possibly with a different primary endpoint, and called a forecast upgrade at the upcoming capital markets day highly improbable.
