What happened
Novartis (NVS -1.64%) enjoyed a strong rally today, as the Swiss drugmaker announced an improved revenue forecast for 2023 and a massive share repurchase program. Specifically, the drugmaker's stock rose by as much as 5.1% on heavy volume during the morning portion of Tuesday's trading session.
Since hitting this intraday high, Novartis' stock modestly cooled off as today's session progressed. However, the drugmaker's shares were still up by a healthy 4.5% at the close on Tuesday.
So what
Novartis expects to grow its annual sales by the high single digits in 2023, up from its previous guidance of mid-single-digit growth. This reflects the robust demand for key products, such as Entresto for heart failure and Pluvicto for prostate cancer, as well as the potential launch of new therapies in its pipeline.
Novartis plans to return up to $15 billion to shareholders through a share buyback program that will run until the end of 2025. The company has ample cash to fund this initiative, thanks to the divestment of its stake in Swiss drugmaker Roche back in 2021 and its disciplined approach to capital allocation.
Keeping with this theme, Novartis has picked up some intriguing assets through smaller bolt-on deals in recent times, such as its $3.5 billion deal for Chinook Therapeutics. However, the company has shied away from capital-intensive megadeals, allowing it to initiate this aggressive share buyback program.
Now what
Is Novartis stock a buy following this rally? I think so. The pharma titan has a robust clinical pipeline, a strong product portfolio, and an exceptionally healthy balance sheet. Those key features ought to appeal to growth and value investors alike.
