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Novartis

posted on December 13, 2012 at 2:37 pm
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On December 7 in my post http://jubakpicks.com/2012/12/07/now-that-patent-expirations-are-dropping-the-drug-sector-is-getting-oddly-harder-here-are-my-five-picks/ I added Novartis (NVS in New York and NOVN.VX in Switzerland ) to my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/ to replace Bristol-Myers Squibb (BMY.)

In that post I wrote that even though the drug sector was about to put the worst of its cascade of patent expirations behind it, a big, fat, pipeline full of lots of potential blockbusters was still a key attribute for a drug stock. In 2011 the company forecast that its pipeline would deliver seven blockbuster drugs by 2017. This year Novartis raised its target to 14 blockbusters by 2017. (The pipeline looks like more than enough to offset the erosion on Glivec, which will lose patent protection in stages through 2023.) Blockbuster candidates include cancer drugs Afinitor and Jakavi (for breast cancer), the Q-family of respiratory drugs (including QVA, Seebri, and Onbrez), Gilenya for MS, and Galvus for diabetes. Novartis has one of the most cost-effective drug research operations in the industry. The company spends about $4 billion per new molecular entity versus the industry average of $5 billion.

I’m setting a target price of $71 a share by October 2013. The stock pays a 3.93% dividend yield.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , may or may not now own positions in any stock mentioned in this post. The fund did not own shares of Novartis as of the end of September. For a full list of the stocks in the fund as of the end of September see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/

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4 comments

  • george lundin on 13 December 2012

    JJ:

    Is there any practical difference in buying this stock as an ADR as against purchasing same in Switzerland?

    GSL @ Seattle

  • rosenau on 14 December 2012

    does herrn juback own any stock in his personal portfolio? not a single stock mentioned for over a year made his way or was in his portfolio? puzzling, isn’t it??

  • Purewater on 14 December 2012

    @rosenau Not puzzling at all. Jim put his investment dollars into his mutual fund. If the MF owns NVS shares Jim doesn’t technically own those shares, the MF does.

  • orenv on 14 December 2012

    I prefer to buy Jims recommendations with a 5-10% discount. I place limit orders and almost always get a better price.

    Doesn’t bother me that he doesn’t own the stocks. I have followed him for many years and he seems to keep going back to the same stocks, so I think he has a set that he follows closely and picks from there. Jubaks picks is a short term portfolio, so if you are investing like Buffett, it would not be interesting for you.

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