Europe’s Stocks to Watch: Novartis, Tullow Oil, Tui Travel

By Nina Bains

Shares in Novartis AG rose Friday after the Basel-based drug maker said it will launch a share buyback program worth $5 billion. The program will start immediately and run over the next two years.

Novartis said it also plans to allocate capital to improve dividends, and will pursue "value-creating" bolt-on acquisitions.

"Today's press release underpins our confidence that the departure of the former Chairman [wsj-people name="Daniel Vasella" displayName="Vasella, Daniel" topicId="4329" onlinesignificance="passing-mention"] has materially elevated the importance of shareholder value within the group," said Deutsche Bank.

Dr. Vasella stepped down as chairman in February 2013 after 25 years at the company.

The bank said the statement has delivered positive, albeit incremental, developments on further cost control and the oncology pipeline outlook as well as the share buyback.

Novartis has also started reconsidering the size and scope of its portfolio of businesses as part of a strategic review to strengthen its operations.

"The buyback, the increasing visibility R&D pipeline and the remaining potential for value creation via addressing the subscale and low-return businesses leave the stock as one of the most attractive in the sector," said analysts at Societe Generale.

In London, shares in FTSE 100-listed Tullow Oil PLC rose almost 2% after the oil and gas exploration company announced it had made a significant discovery in Kenya.

"This is the fifth consecutive oil discovery in the first of a chain of multiple rift basins across Tullow's acreage in the region," said Liberum Capital, an independent investment bank based in London.

Liberum added that the find should build on confidence that Tullow's acreage will contain very material oil resources, which should stand the company in good stead for making further discoveries during the intensive 2014 drilling campaign.

On the downside, blue-chip stock TUI Travel PLC tumbled more than 5% after Norwegian shipping magnate John Fredriksen placed his 5.4% stake in TUI Travel in order to boost his shareholding in TUI Travel's parent company, TUI AG.