What happened

Novartis (NYSE:NVS) shares beat the market last month, gaining 11% compared to a 3.6% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The boost still left shareholders in negative territory, as the stock has trailed the market so far in 2018.

^SPX Chart

^SPX data by YCharts.

So what

July's rally came in response to the solid second-quarter earnings results that the biotech giant announced in the middle of the month. Sales grew 5% on a constant currency basis thanks to strong growth in franchises, including Cosentyx and Entresto. These top-line gains helped push profitability higher, as operating income grew 6%.

A female scientist watches a male scientist pour liquid into Petri dish under a microscope

Image source: Getty Images.

Now what

Novartis recently confirmed management's 2018 sales and earnings forecasts, which call for revenue to grow in the low- to mid-single-digit range, with operating income slightly outpacing that result. There are three potential blockbuster treatments in the pipeline for the second half of the year, followed by four in 2019 -- including AveXis -- and six in fiscal 2020.

Novartis will need to continue spending on research and development to support that pipeline, but investors can generally expect to see modest earnings growth that's supplemented by aggressive stock repurchase spending.