Novartis (NVS)- the ‘smart’ lenses and the rise in their stock and earnings

There has been an understanding of an affiliation between the pharmaceutical company Novartis (NVS_) and Google (GOOG_) which will result in a technological breakthrough, the ‘smart’ contact lenses. With a huge population of diabetics present internationally (approximately 382 million patients), these lenses would be highly beneficial for all. The smart lenses will help diabetic patients monitor the sugar level in their blood regularly and strengthen the eye, helping it to focus much better. Based on the performance of this product, Novartis shall participate in a worldwide market for blood-sugar monitoring. According to GlobalData, a famous research organization, the worth of this market is expected to rise up to $12 billion by the year 2017.

The shares owned by Novartis have fallen from -0.29% to $89.99 and NOVARTIS AG has been classified as a Buy by members of TheStreet Ratings; the same team has placed the company in an A- category. When asked about it, TheStreet Ratings shared their views regarding their decision. They said that they classified NOVARTIS AG (NVS) as a BUY due to the company’s recent constructive investment proceedings, the consequence of which will most likely be that they shall surpass a greater number of stocks TheStreet Ratings have rated. They were also of the view that the company has some tremendous strength that is becoming increasingly visible in the revenue growth, the stock prices, the significant valuation levels and the positive figures seen for their net income and growth in earnings per share. Fortunately for the company, these factors pretty much cancel out the fact that their equity return was highly depressing.

To summarize the evaluation done by TheStreet Ratings Team:

-The previous industry average of NVS was about 5.6% which has somewhat improved recently and consequently, increased the earnings per share.

-During the previous year, the stock has increased and that too at a prominent speed as compared to the S&P 500. This shows that there has been a significant growth in earnings and that the company has some positive strategies implemented. In future, if the market is towards the downside, the stocks may fall, but if the situation remains favorable, this stock has great capability to rise further.

-Taking into account the Pharmaceutical industry average for net income growth, the company has gone beyond that as well as that against the S&P 500. There has been a rise in the net income by 22.6% in comparison with their own net income for the same quarter exactly a year ago. They have gone from $2398.00 million to $2941.00 million.

-To talk about the earnings per share, a progression by 22.7% has been recorded for NOVARTIS AG in comparison with last year’s same quarter. Even though the company has had an inconsistent earning in recent times, it is expected that the EPS growth shall stabilize in the following year. The earnings for NOVARTIS AG were recorded $3.70 in the last financial year, lesser than those in the previous years which were $3.80. However, the expected earnings for this year are $5.18 versus $3.70, which shall be quite an achievement.