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Novartis AG (NVS)
:NVS
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Novartis
(NYSE:NVS)80Outperform
Positive Factors
Product Growth
Cosentyx is maintaining its NBRx share despite increased competition and is expected to grow further with the approval of the HS indication and IV formulation.
Trial Results
Kisqali's NATALEE trial results have received positive feedback from physicians, indicating excitement for its use among eBC patients.
Negative Factors
Pricing Strategy
Management noted that IRA-related price cuts appear manageable but also noted that the 9-year price setting for small molecules vs the 13-year price setting for biologics is an issue that potentially impacts portfolio decisions in favor of biologics.
Novartis (NVS) vs. S&P 500 (SPY)
Market Cap
$220.95B
Dividend Yield2.89%
Average Volume (3M)2.26M
Price to Earnings (P/E)18.8
Beta (1Y)0.47
Revenue Growth1.08%
EPS Growth-17.73%
CountryUS
Employees76,057
SectorHealthcare
Sector Strength74
IndustryPharmaceuticals
Share Statistics
EPS (TTM)5.91
Shares Outstanding2,189,930,400
10 Day Avg. Volume2,438,198
30 Day Avg. Volume2,257,757
Financial Highlights & Ratios
PEG Ratio0.09
Price to Book (P/B)N/A
Price to Sales (P/S)4.22
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$125.00Price Target Upside12.19% Upside
Rating ConsensusHold
Number of Analyst Covering1
Novartis Business Overview & Revenue Model
Company DescriptionNovartis AG develops, manufactures and sells healthcare products. Its two reporting segments are: Innovative Medicines and Sandoz. The Innovative Medicines business develops and sells patented prescription medicines and is made up of two business units: Novartis Oncology and Novartis Pharmaceuticals. The Sandoz segment develops and markets finished dosage form medicines as well as intermediary products, including active pharmaceutical ingredients. The company was founded on February 29, 1996 and is headquartered in Basel, Switzerland.
How the Company Makes MoneyNovartis generates revenue through multiple streams, primarily from the sale of its branded pharmaceuticals and generic and biosimilar products. The company operates through two major divisions: Innovative Medicines and Sandoz. The Innovative Medicines division, which includes patented prescription medicines, is the primary revenue driver, contributing a significant portion of Novartis's income by focusing on high-value therapeutics in areas such as oncology, cardiovascular health, and neuroscience. Sandoz, which provides generic and biosimilar medicines, offers a cost-effective alternative to branded drugs, adding to the company's revenue by catering to a broader market segment. Furthermore, Novartis invests heavily in research and development to foster innovation and bring new drugs to market, thereby sustaining its competitive advantage and revenue growth. Strategic partnerships and collaborations with other healthcare entities and technology companies also play a role in expanding the company's reach and enhancing its product offerings.
Novartis Financial Statement Overview
Summary
Novartis exhibits robust profitability and cash flow generation, with a well-managed balance sheet. The company has maintained strong profit margins and effective equity utilization, although revenue growth and leverage warrant monitoring to sustain long-term financial health.Income Statement
Novartis has demonstrated strong profitability with a consistent gross profit margin above 70% and an improving net profit margin from 14.3% in 2020 to 23.1% in 2024. There is a notable EBIT margin growth from 20.4% in 2020 to 28.1% in 2024, indicating efficient operational management. However, the revenue growth has been relatively flat, with fluctuations over the years, posing a potential challenge for future growth.82
Very Positive
Balance Sheet
The balance sheet shows a stable equity position with a debt-to-equity ratio of 0.71 in 2024, which is manageable for a pharmaceutical company. Return on equity is strong at 27.1% in 2024, reflecting effective utilization of equity capital. However, the equity ratio has decreased from 51.3% in 2021 to 43.1% in 2024, suggesting an increase in leverage.75
Positive
Cash Flow
Free cash flow has grown steadily, with a significant increase from 2020 to 2024. The operating cash flow to net income ratio remains healthy, indicating strong cash generation relative to profits. However, free cash flow growth slowed in recent years, which could impact future investment capacity.78
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 | EBIT |
| 14.54B | 9.77B | 9.20B | 26.95B | 10.15B | EBITDA |
| 20.71B | 18.29B | 14.73B | 17.13B | 15.24B | Net Income Common Stockholders |
| 11.94B | 14.85B | 6.96B | 24.02B | 8.07B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 13.35B | 13.96B | 18.93B | 28.33B | 11.56B | Total Assets |
| 102.25B | 99.94B | 117.45B | 131.79B | 132.06B | Total Debt |
| 31.26B | 26.35B | 27.96B | 31.09B | 38.05B | Net Debt |
| 19.80B | 12.96B | 20.45B | 18.69B | 28.39B | 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 Technical Analysis
Positive
111.42
Price Trends
102.88
Positive
105.19
Positive
107.90
Positive
Market Momentum
1.94
Negative
67.37
Neutral
61.97
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NVS, the sentiment is Positive. The current price of 111.42 is above the 20-day moving average (MA) of 108.02, above the 50-day MA of 102.88, and above the 200-day MA of 107.90, indicating a bullish trend. The MACD of 1.94 indicates Negative momentum. The RSI at 67.37 is Neutral, neither overbought nor oversold. The STOCH value of 61.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NVS.
Novartis Risk Analysis
Novartis disclosed 26 risk factors in its most recent earnings report. Novartis 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 Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $220.95B | 18.83 | 26.33% | 2.89% | 1.08% | -17.73% | |
78 Outperform | $398.27B | 28.57 | 19.68% | 2.96% | -4.51% | 3.69% | |
74 Outperform | $863.84B | 77.78 | 73.95% | 0.58% | 32.00% | 102.18% | |
71 Outperform | $235.30B | 13.83 | 36.96% | 3.35% | 6.85% | 4577.79% | |
69 Neutral | $145.93B | 18.28 | 8.68% | 6.44% | 8.77% | 272.80% | |
60 Neutral | $120.62B | ― | -54.78% | 4.04% | 7.32% | -214.24% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% |
* Healthcare Sector Average
Performance Comparison
NVS
Novartis
111.42
11.76
11.80%
BMY
Bristol-Myers Squibb
59.44
10.09
20.45%
LLY
Eli Lilly & Co
911.06
138.49
17.93%
JNJ
Johnson & Johnson
165.42
10.42
6.72%
MRK
Merck & Company
92.56
-27.01
-22.59%
PFE
Pfizer
25.75
1.21
4.93%
Novartis Earnings Call Summary
Earnings Call Date: Jan 31, 2025 | % Change Since: 6.37% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong financial performance by Novartis with significant growth in key segments such as Entresto, Cosentyx, and Kisqali, along with robust pipeline advancements. However, there are concerns about potential generic entries impacting future performance and a delay in the OAV101 IT study. Overall, the positive achievements and growth in various segments outweigh the challenges highlighted.Highlights
Strong Overall Financial Performance
Novartis reported a 16% sales growth and a 29% core operating income growth in Q4 2024 in constant currency. The full year saw a 12% sales growth and a 22% core operating income growth, achieving a margin of 38.7%.
Entresto Achievements
Entresto achieved $7.8 billion in sales for the full year, up 31%. U.S. sales grew by 41% with significant performance in heart failure and hypertension in China and Japan.
Cosentyx Performance
Cosentyx sales topped $6 billion for the full year, growing 25%. U.S. sales increased by 36%, driven by new launches in HS and IV.
Kesimpta Growth
Kesimpta grew 49%, reaching $3.2 billion in full-year sales. The U.S. market grew by 42%, with strong performance outside the U.S. growing at 67% in constant currency.
Kisqali Sales Increase
Kisqali grew 49% for the full year, reaching $3 billion in sales, with a significant increase in metastatic and early breast cancer settings.
Pluvicto Expansion
Pluvicto delivered $1.4 billion in full-year sales, with a 42% growth in constant currencies, focusing on expanding the PSMAfore launch.
Leqvio and Scemblix Growth
Leqvio showed 114% constant currency full-year growth. Scemblix grew 68%, becoming a market leader in the third-line CML setting.
Pipeline and Innovation Progress
Novartis made significant progress in its pipeline with key approvals and ongoing developments, aiming to maintain growth momentum into the 2030s.
Lowlights
Potential Generic Entries
Novartis anticipates potential generic entries for Entresto, Tasigna, and Promacta in the U.S. in mid-2025, which could impact financial performance.
OAV101 IT Study Delay
The STEER study for OAV101 IT was delayed due to event rate modeling, now expected to read out in the first half of 2025.
Company Guidance
During the Novartis Q4 2024 earnings call, several key metrics and guidance points were highlighted. Novartis reported a strong performance with Q4 sales growing 16% and core operating income increasing by 29% in constant currency. For the full year 2024, sales rose by 12% and core operating income grew by 22%, achieving a core margin of 38.7%. The company expressed confidence in continued growth, projecting a 5% plus sales guidance out to 2029 and mid-single-digit growth in the long term. Key products like Entresto, Cosentyx, Kesimpta, and Kisqali showed robust growth, contributing to these results. The call also addressed the expected impact of generic entries in 2025, with specific assumptions for Entresto's loss of exclusivity. Novartis anticipates mid to high single-digit sales growth and high single to low double-digit core operating income growth for 2025, despite potential generic impacts.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.