Novartis (NOVN.S): 3Q26 First take: Cost control continues to drive earnings momentum, guidance upgrade suggests 2% upside risk to Core Operating Profit

This morning (Oct 27), Novartis reported 3Q26 results, with broadly in-line net sales of $14,522mn and an +8% beat on core operating profit (+$454mn), driven by substantially lower costs versus expectations: COGS 2% below consensus ($73mn), SG&A 10% below ($334mn) and R&D 4% below ($129mn), despite prior commentary of increasing cost phasing in 2H and incremental R&D investments, with no apparent one-time positives as an offset. Revenue came broadly in-line (0%/$70mn), with beats in Cosentyx (4%/$67mn, price), Ilaris (12%/$66mn) and Zolgensma (13%/$45mn, Itvisma launch) offsetting misses in Pluvicto (-8%/-$56mn), Kisqali (-1%/-$23mn) and Scemblix (-2%/-$13mn). Core operating margin reached 41.6%, 294bp above consensus. Novartis upgraded FY26 Core Operating Profit guidance (now in-line to low-single-digit CER growth vs. prior low-single-digit decline), with the mid-point implying c.2% upside risk to consensus core operating profit and c.-1% downside risk to net sales from FX;