Novartis AG (NOVN) AI Stock Analysis

• Market Cap: CHF179.02B
• Dividend Yield: 3.72%
• Average Volume (3M): 2.73M
• Price to Earnings (P/E): 15.7
• Beta (1Y): 0.82
• Revenue Growth: 9.36%
• EPS Growth: -14.82%
• Country: CH
• Employees: 75,883
• Sector: Healthcare
• Sector Strength: 38
• Industry: Drug Manufacturers - General
• EPS (TTM): 1.95
• Shares Outstanding: 2,112,421,900
• 10 Day Avg. Volume: 2,652,906
• 30 Day Avg. Volume: 2,733,751
• PEG Ratio: -0.99
• Price to Book (P/B): 4.47
• Price to Sales (P/S): 3.81
• P/FCF Ratio: 14.28
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: CHF101.55
• Price Target Upside: 7.96% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

• Rating: 80 Outperform
• Price Target: CHF108.00 ▲(14.82% Upside)

Novartis AG's strong financial performance and positive earnings call are the primary drivers of its high score. The company's robust profitability, effective cash flow management, and upgraded guidance contribute significantly to its attractiveness. While technical indicators show mixed signals, the fair valuation and promising pipeline developments further support the stock's potential. Challenges in specific markets and potential generic competition are risks to monitor.

Positive Factors

Financial Performance

Novartis reported a 2% EPS beat for the second quarter, indicating strong earnings performance.

Shareholder Returns

There is a small upside potential from the announced $10 billion buyback, to be completed by the end of 2027.

Strategic Business Development

The company's bolt-on M&A strategy on mid-size assets is more likely to overcome the loss of exclusivity challenges at the turn of the decade.

Negative Factors

Market Competition

Pelacarsen is considered riskier given it is first-in-class and faces a competitive market.

Product Performance

Cosentyx experienced a slower growth trajectory, offsetting some of the strength seen in other products.

Valuation Concerns

The sentiment on valuation remains neutral due to low to mid-single-digit percentage sales CAGR, given patent expirations.

Novartis AG Business Overview & Revenue Model

Company Description

Novartis AG is a global healthcare company based in Switzerland that focuses on the research, development, manufacture, and marketing of innovative pharmaceuticals and generic medicines. The company operates in two main sectors: Innovative Medicines, which includes patented pharmaceuticals across various therapeutic areas such as oncology, cardiology, immunology, and neuroscience, and Sandoz, its generic and biosimilar division. Novartis is known for its strong pipeline of drugs, including well-known treatments like Gleevec for cancer and Cosentyx for autoimmune diseases.

How the Company Makes Money

Novartis generates revenue primarily through the sale of patented innovative medicines and generic pharmaceuticals. The Innovative Medicines segment contributes the majority of the company's revenue, driven by sales of high-value prescription drugs. The Sandoz division adds a significant revenue stream through the sale of generic drugs and biosimilars, which are designed to provide cost-effective alternatives to branded medications. Additionally, Novartis benefits from strategic partnerships and collaborations with other pharmaceutical and biotechnology companies, which can include joint ventures, licensing agreements, and co-development of new therapies. The company also invests in research and development to bring new drugs to market, which can lead to substantial long-term growth and profitability.

Novartis AG Financial Statement Overview

Summary

Novartis AG exhibits strong financial health with robust profitability, stable leverage, and effective cash flow management. The company has shown consistent growth in revenue and profitability metrics, although some fluctuations in net income margins and leverage ratios suggest areas for cautious monitoring.

Income Statement

Novartis AG shows strong profitability with a consistent increase in gross profit margin and net profit margin over the years. The TTM (Trailing-Twelve-Months) data indicates a healthy revenue growth rate of 3.69%, and EBIT and EBITDA margins are robust, reflecting efficient operations. However, the net profit margin has seen fluctuations, suggesting some volatility in net income.

Balance Sheet

The company's balance sheet is stable with a moderate debt-to-equity ratio of 0.78 in the TTM period, indicating a balanced approach to leveraging. Return on equity is strong at 32.56%, showcasing effective use of equity to generate profits. However, the equity ratio has slightly decreased over time, suggesting a gradual increase in leverage.

Cash Flow

Novartis AG demonstrates strong cash flow management with a significant free cash flow growth rate of 12.18% in the TTM period. The operating cash flow to net income ratio is healthy, indicating efficient cash generation relative to net income. The free cash flow to net income ratio remains high, reflecting strong cash conversion. However, there is room for improvement in operating cash flow coverage.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	55.19B	51.72B	46.66B	51.83B	52.88B	49.90B
Gross Profit	42.08B	38.90B	34.19B	36.34B	37.01B	34.78B
EBITDA	22.63B	20.71B	18.25B	14.68B	30.91B	17.21B
Net Income	13.65B	11.94B	14.85B	6.96B	24.02B	8.07B
Balance Sheet
Total Assets	104.39B	102.25B	99.94B	117.45B	131.79B	132.06B
Cash, Cash Equivalents and Short-Term Investments	7.00B	13.35B	13.96B	18.93B	28.33B	11.56B
Total Debt	32.64B	31.26B	26.35B	27.96B	31.09B	38.05B
Total Liabilities	62.34B	58.12B	53.20B	58.03B	63.97B	75.39B
Stockholders Equity	41.98B	44.05B	46.67B	59.34B	67.66B	56.60B
Cash Flow
Free Cash Flow	18.05B	13.80B	11.71B	11.56B	12.10B	11.06B
Operating Cash Flow	20.79B	17.62B	14.46B	14.24B	15.07B	13.65B
Investing Cash Flow	-5.32B	-7.51B	5.60B	1.47B	4.21B	-13.18B
Financing Cash Flow	-17.14B	-11.74B	-14.28B	-20.56B	-16.26B	-2.21B

Novartis AG Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 94.06
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:NOVN, the sentiment is Positive. The current price of 94.06 is above the 20-day moving average (MA) of 93.97, below the 50-day MA of 95.41, and above the 200-day MA of 92.22, indicating a neutral trend. The MACD of -0.46 indicates Negative momentum. The RSI at 48.41 is Neutral, neither overbought nor oversold. The STOCH value of 32.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CH:NOVN.

Novartis AG Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NOVN	80 Outperform	CHF179.02B	15.73		3.72%	9.36%	-14.82%
ALC	77 Outperform	CHF34.53B	34.42	5.23%	0.41%	3.90%	6.76%
RO	74 Outperform	CHF198.44B	21.76		3.76%	4.77%	-11.07%
ROG	73 Outperform	$198.44B	20.80	31.98%	3.94%	4.77%	-11.07%
GALD	71 Outperform	CHF30.91B	94.16		0.12%	6.22%	―
LONN	66 Neutral	CHF37.21B	51.39		0.73%	5.93%	29.83%
Sector *	51 Neutral	$7.35B	-0.20	-44.53%	2.35%	30.18%	-1.17%