(Finance) – Moody’s has improved the rating long-term investment of the Swiss pharmaceutical company Novartis from “A1” to “Aa3“, also changing theoutlook from “positive” to “stable“.
The upgrade reflects the long-standing track record Novartis’ strong operating performance, strong cash flow generation and strong financial profile, supported by the company’s scale, broad geographic and product diversification and strong pipeline.
The rating incorporates Moody’s expectations that the company will continue to exhibit a at least low-to-mid-single digit percentage revenue growth over the next two years, although it will face several patent expirations and growing generic competition on some of its products. Moody’s expects sales of Novartis’ new drugs and line extensions, including Cosentyx, Kisqali, Kesimpta and Pluvicto, to offset this effect.
The stable outlook reflects Moody’s expectation that Novartis will continue to demonstrate strong operating performance over the next 12 to 18 months and generate free cash flow (net of dividends) of nearly $5 billion annually, with gross debt/EBITDA ratio adjusted maintained below 2x.