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Novartis AG (CH:NOVN)
:NOVN
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Novartis AG
(NOVN)
Rating:75Outperform
Price Target:
CHF103.00
▲(12.51%Upside)
Positive Factors
Financial Performance
Novartis reported a 2% EPS beat for the second quarter, indicating strong earnings performance.
Product Performance
Sales growth was in line with consensus, driven by the stronger than expected performance of Kisqali and recently launched products.
Shareholder Returns
A new CFO and share buyback are seen as positive for investor sentiment.
Negative Factors
Market Risks
Pelacarsen is considered riskier given it is first-in-class and faces a competitive market.
Product Challenges
Cosentyx sales were slightly softer due to pricing pressure in the US and China and new competition.
Valuation Concerns
The analyst maintains a Neutral rating, mostly due to valuation concerns and limited upside potential.
Novartis AG (NOVN) vs. iShares MSCI Switzerland ETF (EWL)
Market Cap
CHF175.65B
Dividend Yield0.04%
Average Volume (3M)2.96M
Price to Earnings (P/E)15.4
Beta (1Y)0.84
Revenue Growth9.36%
EPS Growth-14.82%
CountryCH
Employees75,883
SectorHealthcare
Sector Strength40
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)1.93
Shares Outstanding2,112,421,900
10 Day Avg. Volume2,925,379
30 Day Avg. Volume2,960,927
Financial Highlights & Ratios
PEG Ratio2.02
Price to Book (P/B)5.96
Price to Sales (P/S)0.00
P/FCF Ratio13.71
Enterprise Value/Market Cap1.39
Enterprise Value/Revenue1.20
Enterprise Value/Gross Profit6.08
Enterprise Value/Ebitda3.02
Forecast
1Y Price Target
CHF101.78Price Target Upside11.17% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
Novartis AG Business Overview & Revenue Model
Company DescriptionNovartis AG is a leading global healthcare company based in Switzerland that focuses on innovative medicines and generics. The company operates primarily in two segments: Innovative Medicines, which includes patented prescription medicines across various therapeutic areas, and Sandoz, its generics division. Novartis is committed to using science-based innovation to address some of society's most challenging healthcare issues and improve patient outcomes.
How the Company Makes MoneyNovartis makes money through the development, manufacturing, and sale of pharmaceutical products. The company's revenue model is primarily driven by its Innovative Medicines segment, which generates income from the sale of patented drugs across therapeutic areas such as oncology, immunology, neuroscience, and ophthalmology. Additionally, Novartis earns revenue from its Sandoz division by providing generic pharmaceuticals and biosimilars. Novartis often enters into strategic partnerships and collaborations to enhance its research and development capabilities, which can also contribute to its financial performance. Factors such as patent expirations, regulatory approvals, and healthcare policies significantly impact the company's earnings.
Novartis AG Earnings Call Summary
Earnings Call Date:Jul 17, 2025
(Q2-2025)
| % Change Since: -3.75%|
Next Earnings Date:Oct 28, 2025
Earnings Call Sentiment Positive
The earnings call highlighted robust sales growth, upgraded guidance, and strong performance of key brands, alongside promising pipeline developments. However, there are challenges such as moderated growth for Cosentyx, a slowdown in China, and potential generic competition for Entresto.Q2-2025 Updates
Positive Updates
Double-Digit Sales Growth
Novartis delivered an 11% increase in sales and a 21% increase in core operating income in constant currency.
Upgraded Full Year Guidance
Novartis upgraded its full-year 2025 bottom line guidance with sales expected to grow in the high single digits and core operating income in the low teens.
Strong Performance of Key Brands
Priority brands showed robust growth, with Kisqali up 64%, Kesimpta up 33%, and Pluvicto experiencing a 30% increase in the quarter.
New $10 Billion Share Buyback Program
A new share buyback program of up to $10 billion is initiated, targeted for completion by the end of 2027.
Promising Pipeline Developments
Significant pipeline advancements include positive Phase III results for Pluvicto in metastatic hormone-sensitive prostate cancer and promising Phase II results for Remibrutinib in food allergy.
Negative Updates
Cosentyx Growth Moderation
Cosentyx growth slowed to 6% in Q2 due to higher rebates from Medicare Part D redesign and competitive pressures in HS.
Challenges in China
A slowdown in pharmaceutical spending in China impacted growth, notably affecting medicines on the NRDL list like Cosentyx and Entresto.
Potential U.S. Generic Entry for Entresto
Ongoing litigation might affect Entresto's U.S. market with potential generic entry, which could impact sales.
Company Guidance
During the Novartis Q2 2025 earnings call, the company reported substantial financial progress, including an 11% increase in sales and a 21% rise in core operating income, both in constant currency. The core margin improved by 340 basis points to reach 42.2%, while core EPS grew by 24% to $2.42. Free cash flow also surged, achieving a 37% increase to $6.3 billion. Novartis raised its full-year 2025 bottom line guidance, now anticipating core operating income growth in the low teens. The company highlighted significant milestones, such as the submission of OAV101 IT in the U.S. and Europe and key advancements in its portfolio, including a 64% growth in Kisqali and a 33% rise in Kesimpta. Additionally, Novartis announced a new $10 billion share buyback program, emphasizing its balanced approach to capital allocation while maintaining a focus on bolt-on acquisitions and internal R&D investments.Novartis AG Financial Statement Overview
Summary
Novartis AG exhibits strong financial performance with consistent revenue and profit growth, effective cost management, and robust cash flow generation. The debt-to-equity ratio is balanced, and the return on equity is high, though a slight decrease in total assets requires monitoring.Income Statement
Novartis AG demonstrates a robust financial performance with consistent revenue and profit growth. The gross profit margin for TTM (Trailing-Twelve-Months) is approximately 75.7%, indicating effective cost management. The net profit margin has improved to 24.2% in the TTM, showcasing enhanced profitability. The revenue growth rate from the previous period is about 2.9%, which is modest but stable. EBIT and EBITDA margins are strong at 29.8% and 41.0% respectively, reflecting operational efficiency.85
Very Positive
Balance Sheet
The balance sheet of Novartis AG is healthy, with a debt-to-equity ratio of 0.81, indicating a balanced approach to leverage. The return on equity stands at 33.5% in the TTM, highlighting effective use of shareholders' funds to generate income. The equity ratio is 38.4%, which is reasonable, showing a solid equity base. However, the total assets have slightly decreased, which could be an area of concern if the trend continues.78
Positive
Cash Flow
The cash flow position of Novartis AG is strong, with a free cash flow growth rate of 16.6% in the TTM, indicating effective cash generation. The operating cash flow to net income ratio is 1.48, suggesting efficient conversion of net income into cash. The free cash flow to net income ratio is 1.25, demonstrating ample free cash flow to support operations and investments.82
Very Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 51.72B | 46.66B | 51.83B | 52.88B | 49.90B |
| Gross Profit | 38.90B | 34.19B | 36.34B | 37.01B | 34.78B |
| EBITDA | 20.71B | 18.25B | 14.68B | 30.91B | 17.21B |
| Net Income | 11.94B | 14.85B | 6.96B | 24.02B | 8.07B |
Balance Sheet | |||||
| Total Assets | 102.25B | 99.94B | 117.45B | 131.79B | 132.06B |
| Cash, Cash Equivalents and Short-Term Investments | 13.35B | 13.96B | 18.93B | 28.33B | 11.56B |
| Total Debt | 31.26B | 26.35B | 27.96B | 31.09B | 38.05B |
| Total Liabilities | 58.12B | 53.20B | 58.03B | 63.97B | 75.39B |
| Stockholders Equity | 44.05B | 46.67B | 59.34B | 67.66B | 56.60B |
Cash Flow | |||||
| Free Cash Flow | 13.80B | 11.71B | 11.56B | 12.10B | 11.06B |
| Operating Cash Flow | 17.62B | 14.46B | 14.24B | 15.07B | 13.65B |
| Investing Cash Flow | -7.51B | 5.60B | 1.47B | 4.21B | -13.18B |
| Financing Cash Flow | -11.74B | -14.28B | -20.56B | -16.26B | -2.21B |
Novartis AG Technical Analysis
Negative
91.55
Price Trends
94.95
Negative
94.59
Negative
92.37
Negative
Market Momentum
-0.56
Positive
32.91
Neutral
7.18
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:NOVN, the sentiment is Negative. The current price of 91.55 is below the 20-day moving average (MA) of 96.16, below the 50-day MA of 94.95, and below the 200-day MA of 92.37, indicating a bearish trend. The MACD of -0.56 indicates Positive momentum. The RSI at 32.91 is Neutral, neither overbought nor oversold. The STOCH value of 7.18 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CH:NOVN.
Novartis AG Risk Analysis
Novartis AG disclosed 26 risk factors in its most recent earnings report. Novartis AG reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Novartis AG Peers Comparison
Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | CHF175.65B | 15.44 | 0.04% | 9.36% | -14.82% | ||
75 Outperform | CHF208.49B | 24.89 | 26.76% | 3.79% | 3.03% | -27.86% | |
74 Outperform | CHF208.49B | 26.33 | 3.59% | 3.03% | -27.86% | ||
73 Outperform | $35.05B | 34.93 | 5.23% | 0.74% | 3.90% | 6.76% | |
71 Outperform | CHF30.24B | 148.63 | 0.12% | 5.91% | ― | ||
65 Neutral | CHF38.93B | 63.77 | 0.71% | -2.13% | 2.50% | ||
52 Neutral | $7.36B | -0.04 | -63.75% | 2.59% | 16.22% | 0.01% |
* Healthcare Sector Average
Performance Comparison
CH:NOVN
Novartis AG
91.55
-1.31
-1.41%
CH:LONN
Lonza Group Ltd
561.60
43.82
8.46%
CH:ALC
Alcon
69.90
-10.64
-13.21%
CH:ROG
Roche Holding AG
255.60
-8.95
-3.38%
CH:GALD
Galderma Group AG
126.30
56.16
80.07%
CH:RO
Roche Holding Ltd
270.00
-18.02
-6.26%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.