Novartis (NVS) AI Stock Analysis

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Novartis

(NYSE:NVS)

Rating:80Outperform

Price Target:

$139.00

▲(12.34%Upside)

Novartis receives a strong overall score due to its solid financial performance and positive earnings call. The company's profitability metrics and cash flow management are impressive, supporting sustainable growth. The bullish technical trend is tempered by potential overbought signals. Valuation is fair, providing a reasonable entry point for investors. Positive earnings call guidance and sentiment further bolster the stock's attractiveness, despite some operational challenges.

Positive Factors

Financial Performance

Increased cash on the balance sheet has led to a modestly higher target price for Novartis.

Product Development

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

Revenue Expectations

The target price implies modest upside from current levels, suggesting that revenue upside is mostly priced in.

Novartis (NVS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$232.74B

Dividend Yield3.25%

Average Volume (3M)1.26M

Price to Earnings (P/E)19.2

Beta (1Y)0.35

Revenue Growth6.30%

EPS Growth-13.28%

CountryUS

Employees75,883

SectorHealthcare

Sector Strength39

IndustryDrug Manufacturers - General

Share Statistics

EPS (TTM)2.28

Shares Outstanding2,112,421,900

10 Day Avg. Volume1,217,550

30 Day Avg. Volume1,255,227

Financial Highlights & Ratios

PEG Ratio2.06

Price to Book (P/B)5.94

Price to Sales (P/S)0.00

P/FCF Ratio15.40

Enterprise Value/Market Cap1.09

Enterprise Value/Revenue1.26

Enterprise Value/Gross Profit6.34

Enterprise Value/Ebitda3.11

Forecast

1Y Price Target

$117.69

Price Target Upside-4.88% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Novartis Business Overview & Revenue Model

Company DescriptionNovartis AG is a leading global healthcare company based in Switzerland, primarily operating in the pharmaceutical and biotechnology sectors. The company focuses on the research, development, manufacturing, and marketing of innovative medicines to address unmet medical needs. Novartis is known for its extensive portfolio of products across various therapeutic areas, including oncology, immunology, ophthalmology, neuroscience, respiratory, and cardiovascular diseases.

How the Company Makes MoneyNovartis makes money through the sale of its pharmaceutical products and therapies. The company's revenue model is driven by its innovative drug portfolio, which includes both patented and generic medications. Key revenue streams include sales of prescription drugs, such as cancer therapies, cardiovascular treatments, and immunology medicines. Novartis also generates income from its generics division, Sandoz, which provides lower-cost alternatives to branded pharmaceuticals. Additionally, Novartis engages in strategic partnerships and collaborations with other pharmaceutical companies and research institutions, enhancing its research capabilities and expanding its market reach. The company's earnings are influenced by factors such as drug pricing, patent expirations, regulatory approvals, and global healthcare trends.

Novartis Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: 9.86%|

Next Earnings Date:Jul 17, 2025

Earnings Call Sentiment Positive

Novartis reported a strong start to the year with significant sales growth and product approvals, leading to an upgraded full-year guidance. However, challenges remain in the rollout of Pluvicto and the impact of tariffs and European pricing. The sentiment is generally positive, but with some concerns over operational hurdles and geopolitical factors.

Q1-2025 Updates

Positive Updates

Strong Financial Performance

Novartis delivered double-digit sales growth with a 15% increase in sales and a 27% rise in core operating income. The core margin reached 42.1%, a 400 basis point increase, resulting in an upgrade to the full-year 2025 guidance.

Key Product Growth

Kisqali grew 56% in constant currency, showing strong performance in both metastatic and early breast cancer. Kesimpta grew 43% in constant currency, outpacing the B cell and MS market. Pluvicto saw a 21% increase, with significant developments in its launch preparations.

Innovation and Approvals

Novartis achieved approvals for Pluvicto, Vanrafia, and Fabhalta, and had a positive readout for OAV-101 in SMA patients older than 2 years. A global submission was made for remibrutinib in CSU.

Upgraded Full-Year Guidance

Due to strong business momentum, Novartis raised its full-year guidance to high single-digit sales growth and low double-digit core operating income growth.

Negative Updates

Challenges in Pluvicto Rollout

Despite growth, only about half of the centers are using Pluvicto at a target rate, indicating challenges in expanding the number of sites and increasing the volume of patients treated.

Tariff and Tax Concerns

Concerns over tariffs and potential changes to tax rates due to geopolitical factors were noted. The company is taking steps to mitigate these risks by adjusting inventory levels and planning significant investments.

European Pricing Challenges

Continued decline in European drug prices, which no longer reflect the innovation delivered by Novartis, leading to 30% of medicines not being launched or delayed in Europe.

Company Guidance

During the Novartis Q1 2025 earnings call, the company provided robust financial guidance, highlighting a strong start to the year with double-digit sales growth and significant margin expansion. Sales increased by 15%, while core operating income rose by 27%, resulting in a core margin of 42.1%. The company upgraded its full-year 2025 guidance, with expectations of sales growing high single digits and core operating income increasing at a low double-digit rate. Several key brands demonstrated impressive growth, with Kisqali sales up 56% and Kesimpta sales up 43% in constant currency. Additionally, Novartis achieved approvals for Pluvicto, Vanrafia, and Fabhalta, and made a global submission for remibrutinib. The company is also progressing in its gene therapy efforts, with a positive readout for OAV-101 IT for SMA, enhancing its strong pipeline momentum.

Novartis Financial Statement Overview

Summary

Novartis demonstrates strong profitability with a Gross Profit Margin of 75.4% and a Net Profit Margin of 24.3%. The company has robust EBIT and EBITDA margins, reflecting efficient operational management. The balance sheet shows moderate leverage with a Debt-to-Equity Ratio of 0.82 and a healthy ROE of 33.5%. Cash flow management is solid, with a Free Cash Flow Growth Rate of 7.56% and strong cash conversion ratios.

Income Statement

Very Positive

Novartis has shown strong profitability with a Gross Profit Margin of 75.4% and a Net Profit Margin of 24.3% for the TTM period. Revenue has grown by 2.21% from the previous year, indicating a steady growth trajectory. The EBIT Margin is robust at 29.8%, and the EBITDA Margin is 41.4%, reflecting efficient operational management.

Balance Sheet

Positive

The company's Debt-to-Equity Ratio stands at 0.82, indicating moderate leverage. The Return on Equity (ROE) is a healthy 33.5%, demonstrating effective use of equity to generate profits. However, the Equity Ratio is 38.4%, suggesting a balanced but slightly conservative capital structure.

Cash Flow

Positive

Novartis exhibits solid cash flow management with a Free Cash Flow Growth Rate of 7.56%. The Operating Cash Flow to Net Income Ratio is 1.48, and the Free Cash Flow to Net Income Ratio is 1.15, indicating strong cash conversion and sufficient cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	52.86B	51.72B	46.66B	51.83B	52.88B	49.90B
Gross Profit	39.86B	38.90B	34.19B	36.34B	37.01B	34.78B
EBITDA	21.88B	20.71B	18.29B	14.73B	17.13B	15.24B
Net Income	12.86B	11.94B	14.85B	6.96B	24.02B	8.07B
Balance Sheet
Total Assets	99.94B	102.25B	99.94B	117.45B	131.79B	132.06B
Cash, Cash Equivalents and Short-Term Investments	7.20B	13.35B	13.96B	18.93B	28.33B	11.56B
Total Debt	31.27B	31.26B	26.35B	27.96B	31.09B	38.05B
Total Liabilities	61.49B	58.12B	53.20B	58.03B	63.97B	75.39B
Stockholders Equity	38.37B	44.05B	46.67B	59.34B	67.66B	56.60B
Cash Flow
Free Cash Flow	14.85B	13.80B	11.71B	11.56B	12.10B	11.06B
Operating Cash Flow	19.00B	17.62B	14.46B	14.24B	15.07B	13.65B
Investing Cash Flow	-6.28B	-7.51B	5.60B	1.47B	4.21B	-13.18B
Financing Cash Flow	-15.13B	-11.74B	-14.28B	-20.56B	-16.26B	-2.21B

Novartis Technical Analysis

Technical Analysis Sentiment

Positive

Last Price123.73

Price Trends

50DMA

115.63

Positive

100DMA

112.17

Positive

200DMA

107.52

Positive

Market Momentum

MACD

2.14

Negative

RSI

66.12

Neutral

STOCH

69.13

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 123.73 is above the 20-day moving average (MA) of 119.97, above the 50-day MA of 115.63, and above the 200-day MA of 107.52, indicating a bullish trend. The MACD of 2.14 indicates Negative momentum. The RSI at 66.12 is Neutral, neither overbought nor oversold. The STOCH value of 69.13 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 (46)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MRK	81 Outperform	$204.32B	11.85	39.31%	3.87%	4.40%	654.93%
NVS	80 Outperform	$232.74B	19.24	32.95%	3.25%	6.30%	-13.28%
AZN	78 Outperform	$217.88B	28.64	19.81%	2.96%	15.48%	22.70%
AMGN	73 Outperform	$159.44B	27.42	105.67%	3.21%	15.59%	56.99%
PFE	72 Outperform	$145.66B	18.57	8.62%	6.73%	13.38%	―
SNY	67 Neutral	$118.62B	20.53	7.34%	4.53%	-4.57%	2.96%
Sector *	46 Neutral	C$200.35M	-3.25	-23.22%	2.71%	21.07%	-1.26%

* Healthcare Sector Average

Performance Comparison

NVS

Novartis

123.73

15.32

14.13%

AMGN

Amgen

300.37

-20.12

-6.28%

AZN

AstraZeneca

71.81

-5.87

-7.56%

MRK

Merck & Company

84.02

-39.57

-32.02%

PFE

Pfizer

25.78

-1.33

-4.91%

SNY

Sanofi

49.34

-0.40

-0.80%

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: Jun 13, 2025