Sandoz Earnings: Muted Growth as Pricing Headwinds Pick Up; Tariff Impacts Immaterial for Now

No-moat Sandoz reported first-quarter earnings that came in largely as we expected. Total sales of $2.5 billion was down 0.5% year over year but up 3% excluding foreign exchange and divestitures with 6% volume growth and 3% pricing headwinds. In constant currency, biosimilars were up 11% in constant currency and continue to lead the way for growth, and generics were flat as mild volume growth was negated by price erosion. We maintain our fair value estimate of CHF 41 per share and see shares trading in a modestly favorable territory.