Novartis Shuffles Its Research Division


Pharmaceutical titanNovartis ( NVS ) announced job cuts in its research arm Thursday and the closure of facilities in Europe and the U.S.

The moves, reported by Bloomberg, are part of a restructuring in Novartis' research operations. About 500 workers are being cut, while two facilities in Europe and one in La Jolla, Calif., will be shuttered. Also, the cancer research unit will move to Cambridge, Mass., from Emeryville, Calif.

The Switzerland-based drug manufacturer has been reviewing its operations since Joerg Reinhardt became chairman in August. Novartis is targeting its animal-health business for a divestiture, Bloomberg has reported.

The company has had a mediocre 2013, in which its annual profit is expected to fall 1%. But analysts estimate a profit increase of 6% in 2014 as the company resumes its steady history of earnings.

Novartis' annualized profit growth rate over the past three years is only 2%, but the three-year earnings stability factor is outstanding at 3 on a scale of zero (most steady) to 99 (most volatile).

As a dividend stock, Novartis is a standout.

Based on U.S. dollars, the stock's annualized dividend yield exceeds 2.5%.

The dividend has gone up every year since 1996, according to the company's website. In fact, its 60% dividend long-term growth rate is the highest of all stocks in IBD's Dividend Leaders screen.

Novartis makes treatments for cardiovascular, nervous system, infectious and other diseases. It also has robust businesses in eye care, generic drugs, vaccines, diagnostic tools and over-the-counter drugs.

Reflecting its steady financial performance, the stock tends to trade quietly. The deepest correction in recent history was the 46% decline during the 2008-09 bear market.

Novartis' U.S.-traded shares are near record highs. The stock recently regained its 50-day moving average.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: NVS

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