Novartis AG (NOVN) AI Stock Analysis

• Market Cap: CHF220.89B
• Dividend Yield: 3.18%
• Average Volume (3M): 2.71M
• Price to Earnings (P/E): 18.6
• Beta (1Y): 0.97
• Revenue Growth: 7.62%
• EPS Growth: -18.33%
• Country: CH
• Employees: 75,883
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - General
• EPS (TTM): 1.80
• 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: CHF112.56
• Price Target Upside: -3.02% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 80 Outperform
• Price Target: CHF134.00 ▲(15.46% 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 free cash flow generation

Large, consistent free cash flow demonstrates durable ability to fund R&D, manufacturing expansion, buybacks and dividends without needing to raise equity. Over 9 months FCF of $16B supports strategic investments and provides financial flexibility versus peers with weaker cash conversion.

Robust margins and profitability

High gross and operating margins reflect pricing power, efficient R&D and manufacturing scale across Innovative Medicines. Elevated profitability supports reinvestment in pipeline and shields earnings against moderate revenue slowdowns, underpinning longer-term cash generation.

Scaling radioligand therapy manufacturing

Expanding specialized RLT production capacity is a structural competitive advantage as radioligand therapies scale. Built-in manufacturing reduces supply bottlenecks, improves reliability for complex therapies, and supports faster commercialization and market share capture over coming years.

Negative Factors

Generic erosion on legacy products

Loss of exclusivity on key older drugs creates recurring revenue headwinds that are structural and long-lasting. Generic competition compresses pricing and volume, forcing Novartis to rely on new launches to offset a durable decline in legacy product income and pressure top-line growth.

Exposure to U.S. drug-pricing agreements

Voluntary price concessions and commitments to MFN-style pricing and repatriation can structurally reduce U.S. realized prices and margins on new launches. Over time these policy-driven price constraints may lower profit per unit and limit upside from U.S. commercialization.

Concentration risk from product performance

Reliance on a handful of high-revenue brands increases vulnerability if growth stalls. Slower or negative trends in major products like Cosentyx create sustained revenue volatility and heighten pressure on the pipeline and new launches to replace mature franchise performance.

Novartis AG Business Overview & Revenue Model

Company Description

Novartis 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 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: 116.06
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• 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 116.06 is above the 20-day moving average (MA) of 109.96, above the 50-day MA of 106.08, and above the 200-day MA of 99.15, indicating a bullish trend. The MACD of 2.46 indicates Negative momentum. The RSI at 77.04 is Negative, neither overbought nor oversold. The STOCH value of 91.38 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	CHF220.89B	18.61	―	3.18%	7.62%	-18.33%
ALC	75 Outperform	CHF31.85B	35.07	4.82%	0.44%	0.39%	-12.46%
RO	74 Outperform	CHF275.00B	29.83	―	2.88%	4.77%	-11.07%
ROG	73 Outperform	$275.00B	29.04	31.98%	2.94%	4.77%	-11.07%
LONN	71 Outperform	CHF38.13B	52.65	―	0.75%	5.93%	29.83%
GALD	70 Outperform	CHF37.95B	116.96	―	0.09%	6.22%	―
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%