Rob Black's Healthcare Stock Report

| About: Novartis AG (NVS)
Novartis’ (NYSE:NVS) share price has declined by 6% since November 7 following: 1) the recent announcement of the Galvus three-month extension to the FDA PDUFA date from November 24, 2006 to an estimated date of February 22, 2007, and 2) the effect of the election of a Democratic House of Representatives in the US.

This decline seems excessive as we estimate Novartis offers the second fastest five-year earnings growth in the sector after Roche and expect several positive catalysts by the end of the year, including the approval of Tekturna (estimated PDUFA December 14, 2006) and Exforge (estimated PDUFA December 29, 2006). Therefore in our opinion, the current level offers an ideal entry point for the stock, ahead of the pipeline event on Tuesday November 28, 2006. Novartis’ pharma top-line growth has been driven by strong volume growth and has been less dependent on price increases than, for instance, GlaxoSmithKline's top-line growth. In view of Novartis’ strong launch schedule, expect the pharma division’s volume growth to remain strong in the coming year.