Novartis 4Q Profit May Drop -- Earnings Preview

By Marta Falconi

Novartis AG (NVS) is schedule to announce its fourth-quarter earnings before the market opens Tuesday. Here's what you need to know:

EARNINGS FORECAST: Core net income of $2.83 billion is the consensus of analysts surveyed by Dow Jones, compared with $2.89 billion reported a year earlier. Core net profit attributable to shareholders is forecast at $2.84 billion, compared to $2.86 billion a year earlier.

REVENUE FORECAST: Revenue of $14.68 billion is forecast, compared with $14.93 billion reported the year earlier.

WHAT TO WATCH:

--DIOVAN SALES: Following the launch in July of a generic version of the blockbuster hypertension drug, sales are expected to continue to decline.

--CHANGES IN THE BUSINESS MIX: focus on updates on the transactions announced last year with GlaxoSmithKline and Eli Lilly.

--COST-SAVINGS: Investors are keen on details on the implementation of the Business Services project, which aims at consolidating back-office functions, as part of Novartis's wider cost-saving and margin improvement efforts.

--FX: Currency swings following the Swiss National Bank's decision to scrap its cap for the Swiss franc against the euro will impact 2015 guidance, analysts say.

--LCZ696: Any commentary on this treatment for heart failure --possibly Novartis's hottest pipeline asset-- would be the focus of interest.

Write to Marta Falconi at [e-mail]

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