Novartis AG was the first life sciences company to report second-quarter 2022 earnings and was rewarded with a 4% stock price rise compared to the NYSE Arca Pharmaceutical Index’s same-day 1% gain. I was initially surprised that investors were rewarding Novartis for reporting net sales and core earnings per share (EPS) that declined by 1.4% and 6%, respectively, on the same quarter of 2021 (which provided a tough EPS comparison without its now-divested stake in Swiss compatriot, Roche Holding AG). (Also see "Novartis Finance Chief Rules Out Large M&A" - Scrip, 19 July, 2022.) Novartis’s sales were in line with analysts’ consensus estimates and EPS were about 3% ahead of analyst expectations.
Unlike Roche, Novartis reports in US dollars. A significant worry in the run-up to this earnings season has been that the strength of the dollar in the second quarter would...