Novartis AG (NOVN) AI Stock Analysis

• Market Cap: CHF193.14B
• Dividend Yield: 3.35%
• Average Volume (3M): 2.71M
• Price to Earnings (P/E): 16.3
• Beta (1Y): 0.92
• Revenue Growth: 7.62%
• EPS Growth: -18.33%
• Country: CH
• Employees: 75,883
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - General
• EPS (TTM): 1.82
• Shares Outstanding: 2,112,421,900
• 10 Day Avg. Volume: 2,438,245
• 30 Day Avg. Volume: 2,709,021
• 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: CHF103.40
• Price Target Upside: -1.03% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 80 Outperform
• Price Target: CHF122.00 ▲(16.77% Upside)

Novartis AG's strong financial performance and positive earnings call sentiment are the most significant factors driving the score. The company's robust profitability, stable balance sheet, and growth in key products support its long-term potential. Technical indicators suggest bullish momentum, though caution is advised due to potential overbought conditions. Valuation metrics indicate a fair price with a solid dividend yield.

Positive Factors

Strong Sales Growth

The consistent sales growth and strong core operating income reflect Novartis's effective market strategy and product demand, supporting long-term revenue expansion.

Pipeline Milestones

Achieving key pipeline milestones ensures future revenue streams and strengthens Novartis's competitive position in the pharmaceutical industry.

Cash Flow Strength

Strong cash flow growth enhances Novartis's ability to invest in R&D and strategic acquisitions, supporting sustainable long-term growth.

Negative Factors

Cosentyx Growth Challenges

Declining sales of Cosentyx highlight competitive pressures and market challenges, potentially affecting future revenue from this key product.

Generic Erosion Impact

Generic erosion pressures revenue from established products, necessitating strategic shifts to mitigate long-term financial impacts.

Gross to Net Adjustments

Financial adjustments due to regulatory changes can introduce volatility in earnings, affecting predictability and planning.

Novartis AG Business Overview & Revenue Model

Company Description

Novartis AG is a global healthcare company based in Switzerland, primarily focused on the research, development, manufacturing, and marketing of innovative pharmaceuticals and generic medicines. The company operates through two main segments: Innovative Medicines, which includes patented prescription drugs across various therapeutic areas such as oncology, cardiology, immunology, and neuroscience; and Sandoz, its generics and biosimilars division. Novartis aims to improve patient outcomes through a diverse portfolio of medicines, advanced therapies, and cutting-edge technology.

How the Company Makes Money

Novartis generates revenue primarily through the sale of its pharmaceutical products, with a significant portion coming from its Innovative Medicines segment, which includes blockbuster drugs and new therapies that command premium pricing. Key revenue streams include sales from patented medications, including oncology treatments like Kymriah and other therapeutic areas. Additionally, the Sandoz division contributes revenue through the sale of generic drugs and biosimilars, which cater to cost-sensitive markets. The company also engages in strategic partnerships and collaborations with other biopharmaceutical companies and research institutions, which can result in shared revenues from co-developed products and licensing agreements. Furthermore, Novartis invests in research and development to ensure a robust pipeline of new drugs, which is crucial for sustaining long-term revenue growth as older patents expire. Overall, Novartis's diverse portfolio, along with its commitment to innovation and strategic partnerships, positions the company for continued success in the competitive healthcare market.

Novartis AG Financial Statement Overview

Summary

Novartis AG exhibits strong financial health with robust profitability, a stable balance sheet, and excellent cash flow generation. The company maintains strong margins and cash flow, supporting its long-term stability and growth potential, despite a slowdown in revenue growth.

Income Statement

Novartis AG demonstrates strong profitability with a consistent gross profit margin around 76% and a net profit margin of 25.5% in the TTM. The revenue growth rate of 2.15% in the TTM indicates steady growth, although it has slowed compared to previous years. EBIT and EBITDA margins are robust at 31.1% and 40.5% respectively, reflecting efficient operations.

Balance Sheet

The company's balance sheet is solid with a manageable debt-to-equity ratio of 0.72 in the TTM, indicating moderate leverage. Return on equity is strong at 34.1%, showcasing effective use of equity to generate profits. The equity ratio stands at 41.3%, suggesting a stable financial structure.

Cash Flow

Novartis AG's cash flow is healthy, with a significant free cash flow growth rate of 140.2% in the TTM. The operating cash flow to net income ratio is 1.46, indicating strong cash generation relative to net income. The free cash flow to net income ratio of 0.87 further supports the company's ability to generate cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	56.37B	51.72B	46.66B	43.46B	43.97B	49.90B
Gross Profit	42.96B	38.90B	34.19B	31.88B	32.24B	34.78B
EBITDA	22.85B	20.71B	18.25B	14.68B	30.91B	17.21B
Net Income	14.39B	11.94B	14.85B	6.96B	24.02B	8.07B
Balance Sheet
Total Assets	107.29B	102.25B	99.94B	117.45B	131.79B	127.78B
Cash, Cash Equivalents and Short-Term Investments	9.75B	13.35B	13.96B	18.61B	28.11B	11.29B
Total Debt	32.02B	31.26B	26.35B	27.91B	31.02B	37.85B
Total Liabilities	62.54B	58.12B	53.20B	58.03B	63.97B	71.11B
Stockholders Equity	44.33B	44.05B	46.67B	59.34B	67.66B	56.60B
Cash Flow
Free Cash Flow	18.30B	13.80B	11.71B	11.56B	12.10B	11.06B
Operating Cash Flow	21.07B	17.62B	14.46B	14.24B	15.07B	13.65B
Investing Cash Flow	-5.81B	-7.51B	5.60B	1.47B	4.21B	-13.18B
Financing Cash Flow	-19.55B	-11.74B	-14.28B	-20.56B	-16.26B	-2.21B

Novartis AG Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 104.48
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 104.48 is above the 20-day moving average (MA) of 102.89, above the 50-day MA of 102.59, and above the 200-day MA of 97.33, indicating a bullish trend. The MACD of 0.50 indicates Negative momentum. The RSI at 55.74 is Neutral, neither overbought nor oversold. The STOCH value of 81.96 is Negative, 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	CHF193.14B	16.27	―	3.35%	7.62%	-18.33%
ALC	75 Outperform	$31.91B	35.14	4.82%	0.44%	0.39%	-12.46%
RO	74 Outperform	CHF211.66B	23.41	―	3.04%	4.77%	-11.07%
ROG	73 Outperform	$246.07B	25.95	31.98%	3.16%	4.77%	-11.07%
LONN	71 Outperform	CHF36.90B	50.96	―	0.73%	5.93%	29.83%
GALD	70 Outperform	CHF37.57B	115.80	―	0.09%	6.22%	―
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Novartis AG Corporate Events

Exelixis and Novartis: Key Updates from the Pan Tumor Rollover Study

The Pan Tumor Rollover Study, officially titled ‘Pan-Tumor Study for Long-term Treatment of Cancer Patients Who Have Participated in BMS Sponsored Trials Investigating Nivolumab and Other Cancer Therapies,’ aims to assess the long-term safety of nivolumab, both as a monotherapy and in combination with other cancer treatments, across various tumor types. This study is significant as it seeks to provide insights into the sustained safety profile of these therapies, potentially impacting treatment protocols for cancer patients.

Novartis and Incyte’s Ruxolitinib Study: A Potential Game-Changer for Myelofibrosis Treatment

Novartis AG and Incyte Corporation have recently updated their clinical study on the JAK inhibitor ruxolitinib, targeting patients with various forms of myelofibrosis. Officially titled ‘A Phase Ib, Open-label, Dose-finding Study of the JAK Inhibitor INC424 Tablets,’ the study aims to determine the maximum safe starting dose of ruxolitinib in patients with specific platelet counts. This study is significant as it seeks to improve treatment options for myelofibrosis, a challenging bone marrow disorder.