Novartis (NVS) Surges 4.0%: Is This an Indication of Further Gains?

Novartis NVS shares ended the last trading session 4% higher at $107.52. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 5.2% loss over the past four weeks.

This rise in share price came after the Swiss drugmaker announced plans to expand its U.S.-based manufacturing and R&D footprint. Novartis said it would invest $23 billion in 10 facilities, including seven brand new facilities, over the next five years to boost production in the country.

This drugmaker is expected to post quarterly earnings of $2.06 per share in its upcoming report, which represents a year-over-year change of +14.4%. Revenues are expected to be $12.86 billion, up 8.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Novartis, the consensus EPS estimate for the quarter has been revised 3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on NVS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Novartis belongs to the Zacks Large Cap Pharmaceuticals industry. Another stock from the same industry, Johnson & Johnson JNJ, closed the last trading session 2% higher at $151.73. Over the past month, JNJ has returned -8.8%.

Johnson & Johnson's consensus EPS estimate for the upcoming report has changed -0.6% over the past month to $2.57. Compared to the company's year-ago EPS, this represents a change of -5.2%. Johnson & Johnson currently boasts a Zacks Rank of #3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research