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Novartis AG (CH:NOVN)
:NOVN
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Novartis AG (NOVN) AI Stock Analysis

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CH:NOVN

Novartis AG

(NOVN)

Rating:81Outperform
Price Target:
CHF116.00
▲(14.67% 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 reflect a solid foundation for growth. Technical analysis suggests positive momentum, though caution is advised due to potential overbought conditions. Valuation metrics are reasonable, supporting the overall positive outlook.
Positive Factors
Clinical Trials
Novartis announced positive topline data for ianalumab in both NEPTUNUS 1 and 2 trials in Sjogren’s syndrome, marking significant progress for Novartis in developing treatments for an autoimmune disease with a significant patient population and unmet need.
Earnings Performance
Novartis reported a 2% EPS beat for the second quarter, indicating strong earnings performance.
Mergers and Acquisitions
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
Generic Competition
There is more to be done in the face of $32bn in sales which faces generic competition out to 2030.
Product Performance
Cosentyx experienced a slower growth trajectory, offsetting some of the strength seen in other products.
R&D and Pipeline Risks
Pelacarsen is considered riskier given it is first-in-class and faces a competitive market.

Novartis AG (NOVN) vs. iShares MSCI Switzerland ETF (EWL)

Novartis AG Business Overview & Revenue Model

Company DescriptionNovartis AG researches, develops, manufactures, and markets healthcare products worldwide. The company operates through two segments, Innovative Medicines and Sandoz. The Innovative Medicines segment offers prescription medicines for patients and healthcare providers. It also provides ophthalmology, neuroscience, immunology, hepatology, dermatology, respiratory, cardiovascular, renal, and metabolism medicine products. The Sandoz segment develops, manufactures, and markets finished dosage form medicines; active ingredients and finished dosage forms of small molecule pharmaceuticals to third parties; and retail generics and anti-infectives. It also provides active pharmaceutical ingredients and intermediates primarily antibiotics; protein- or other biotechnology-based products, including biosimilars; and biotechnology manufacturing services. Novartis AG has a license and collaboration agreement with Alnylam Pharmaceuticals to develop, manufacture, and commercialize inclisiran; and a clinical collaboration with Kura Oncology, Inc. to evaluate the combination of Tipifarnib and Alpelisib in patients with head and neck squamous cell carcinoma. The company was incorporated in 1996 and is headquartered in Basel, Switzerland.
How the Company Makes MoneyNovartis 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 Earnings Call Summary

Earnings Call Date:Jul 17, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 28, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and product growth across key areas, supported by positive pipeline developments and an upgraded full-year guidance. However, challenges were noted in the competitive landscape and specific market pressures, such as in China and the U.S. with potential generic competition for Entresto.
Q2-2025 Updates
Positive Updates
Strong Sales and Core Operating Income Growth
Novartis reported double-digit sales growth of 11% and a 21% increase in core operating income in constant currency for Q2 2025.
Upgrade in Full-Year Bottom Line Guidance
The company has upgraded its full-year 2025 bottom line guidance, reflecting strong business momentum and ongoing productivity improvements.
Key Product Performance
Kisqali grew 64% with U.S. growth up 100% in Q2. Kesimpta grew 33%, and Leqvio grew 61%. Scemblix showed 79% growth, and Pluvicto returned to 30% growth.
New Share Buyback Program
Novartis initiated a new up to $10 billion share buyback program targeted for completion by the end of 2027.
Positive Pipeline Developments
Positive Phase III results for Pluvicto in metastatic hormone-sensitive prostate cancer and remibrutinib in food allergy.
Innovative Milestones
Progress in pipeline with initiatives such as Phase I/II data on YTB for immune reset in autoimmune diseases.
Negative Updates
Cosentyx Growth Moderation
Cosentyx growth moderated to 6% in Q2 due to competition and pricing impacts, particularly in the U.S. and China.
Challenges in China
Broader-based healthcare spending tightening in China impacted growth, particularly for products like Cosentyx and Entresto.
Potential Generic Entry for Entresto
Financial forecasting assumptions include potential U.S. generic entry for Entresto, which could impact future sales.
Company Guidance
During the Novartis Q2 2025 earnings call, the company reported significant financial growth, with a notable 11% increase in sales and a 21% rise in core operating income, both in constant currency. The core margin expanded by 340 basis points to 42.2%, and core EPS grew by 24% to $2.42. Free cash flow increased by 37% to $6.3 billion. Novartis upgraded its full-year 2025 guidance, projecting core operating income growth in the low teens. Key growth drivers included a diverse portfolio of products, such as Kisqali, which grew 64% in the quarter, and Kesimpta, with a 33% increase. Additionally, Novartis announced a new up to $10 billion share buyback program, reflecting its robust financial health and commitment to balanced capital allocation.

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
85
Very Positive
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
78
Positive
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
82
Very Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue55.19B51.72B46.66B43.46B43.97B49.90B
Gross Profit42.08B38.90B34.19B31.88B32.24B34.78B
EBITDA22.63B20.71B18.25B14.68B30.91B17.21B
Net Income13.65B11.94B14.85B6.96B24.02B8.07B
Balance Sheet
Total Assets104.39B102.25B99.94B117.45B131.79B127.78B
Cash, Cash Equivalents and Short-Term Investments7.00B13.35B13.96B18.61B28.11B11.29B
Total Debt32.64B31.26B26.35B27.91B31.02B37.85B
Total Liabilities62.34B58.12B53.20B58.03B63.97B71.11B
Stockholders Equity41.98B44.05B46.67B59.34B67.66B56.60B
Cash Flow
Free Cash Flow18.05B13.80B11.71B11.56B12.10B11.06B
Operating Cash Flow20.79B17.62B14.46B14.24B15.07B13.65B
Investing Cash Flow-5.32B-7.51B5.60B1.47B4.21B-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 Price101.16
Price Trends
50DMA
96.70
Positive
100DMA
94.62
Positive
200DMA
92.83
Positive
Market Momentum
MACD
1.80
Negative
RSI
62.22
Neutral
STOCH
57.03
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 101.16 is above the 20-day moving average (MA) of 98.64, above the 50-day MA of 96.70, and above the 200-day MA of 92.83, indicating a bullish trend. The MACD of 1.80 indicates Negative momentum. The RSI at 62.22 is Neutral, neither overbought nor oversold. The STOCH value of 57.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
CHF192.53B16.92
3.46%9.36%-14.82%
74
Outperform
CHF208.76B23.14
3.54%4.77%-11.07%
51
Neutral
$7.85B-0.21-41.41%2.22%22.81%-2.01%
$256.51B23.7531.98%3.37%
70
Outperform
CHF38.74B53.50
0.71%5.93%29.83%
$39.09B36.814.98%0.42%
71
Outperform
CHF33.16B101.03
0.11%6.22%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CH:NOVN
Novartis AG
101.16
2.01
2.03%
RHHVF
Roche Holding AG
325.56
9.19
2.90%
CH:LONN
Lonza Group Ltd
567.00
22.01
4.04%
ALC
Alcon
79.81
-15.55
-16.31%
CH:GALD
Galderma Group AG
139.60
58.84
72.86%
CH:RO
Roche Holding Ltd
274.20
-26.04
-8.67%
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.Date of analysis: Aug 19, 2025