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Novartis
(NYSE:NVS)
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Rating:68Neutral
Price Target:
$167.00
▲(7.73% Upside)
Action:Reiterated
Date:07/23/26
The score is driven primarily by solid underlying profitability and strong free cash flow, but is held back by the very weak TTM revenue growth print and higher leverage. Earnings call commentary was supportive with reaffirmed guidance and strong priority-brand momentum, while technical signals are neutral and valuation appears moderate with a supportive dividend yield.
Positive Factors
High margins & earnings quality
Sustained high gross and operating margins coupled with large TTM free cash flow reflect durable pricing power and efficient operations. This margin profile supports consistent funding for R&D, commercialization, and shareholder returns, insulating core profitability over the medium term.
Negative Factors
Rising leverage
Materially higher leverage reduces financial flexibility and raises interest and refinancing sensitivity. With elevated debt relative to equity, the company is more exposed to earnings volatility and has less optionality for opportunistic M&A or cushioning of operational setbacks over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
High margins & earnings quality
Sustained high gross and operating margins coupled with large TTM free cash flow reflect durable pricing power and efficient operations. This margin profile supports consistent funding for R&D, commercialization, and shareholder returns, insulating core profitability over the medium term.
Read all positive factors
Novartis (NVS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$286.92B
Dividend Yield3.04%
Average Volume (3M)2.04M
Price to Earnings (P/E)23.8
Beta (1Y)0.29
Revenue Growth2.33%
EPS Growth-4.08%
CountryUS
Employees75,267
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)6.66
Shares Outstanding2,034,819,500
10 Day Avg. Volume1,902,242
30 Day Avg. Volume2,036,012
Financial Highlights & Ratios
PEG Ratio0.85
Price to Book (P/B)5.79
Price to Sales (P/S)4.88
P/FCF Ratio15.11
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$159.00Price Target Upside2.57% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)8.78
Revenue Forecast (FY)$57.02B
Novartis Business Overview & Revenue Model
Company Description
Novartis AG (NVS) is a Switzerland-based global pharmaceutical company focused on developing, manufacturing, and commercializing prescription medicines. The company’s core business is innovative (branded) medicines across multiple therapeutic area...
How the Company Makes Money
Novartis primarily makes money by selling patented, branded prescription drugs to healthcare systems (including government payers), private insurers, hospitals, and pharmacies worldwide. Revenue is generated when its medicines are purchased and re...
Novartis Earnings Call Summary
Earnings Call Date:Jul 21, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 27, 2026
Earnings Call Sentiment Positive
The call presented a largely positive commercial and pipeline picture: multiple priority brands delivered high double-digit growth, Q2 returned to net sales growth, important regulatory and biomarker milestones were achieved, and management reaffirmed full-year guidance while outlining a busy H2 of pivotal readouts. Offsetting risks include H1 generic erosion and margin pressure (partly acquisition-related), temporary phasing effects that favor Q2, and several high-impact clinical readouts and regional competitive pressures that remain uncertain. On balance, the upside from strong product momentum, cash generation and pipeline progress outweighs the near-term headwinds.Positive Updates
Return to Revenue Growth in Q2
Net sales grew 1% in constant currencies to $14.4 billion in Q2 2026, with core operating income flat at $5.9 billion. The company reaffirmed full-year 2026 guidance (net sales: low single-digit growth; core operating income: low single-digit decline).
Negative Updates
First-Half Generic Erosion and H1 Declines
Significant U.S. generic erosion impacted results in H1: H1 net sales declined 2% and core operating income declined 7% year-to-date, with core operating margin down 2.3 percentage points to 39.4%.
Read all updates
Q2-2026 Updates
Positive
Negative
Return to Revenue Growth in Q2
Net sales grew 1% in constant currencies to $14.4 billion in Q2 2026, with core operating income flat at $5.9 billion. The company reaffirmed full-year 2026 guidance (net sales: low single-digit growth; core operating income: low single-digit decline).
Read all positive updates
Company Guidance
Novartis reaffirmed its full‑year 2026 guidance, reiterating net sales growth of low single digits and a low‑single‑digit decline in core operating income, with core net financial results of ~ $1.7 billion and a core tax rate of ~16.5%; the company expects H2 net sales to grow mid‑single digits and H2 core operating income to grow mid‑ to high‑single digits (noting about $800 million of prior‑year U.S. Entresto sales in the Q3 base). In Q2 the group reported net sales of $14.4 billion (up 1% in constant currencies) and flat core operating income at $5.9 billion with a 41.2% core operating margin (‑70 bps); H1 net sales were down 2%, H1 core operating income down 7% and H1 core operating margin was 39.4% (‑230 bps). Free cash flow was $5.6 billion in Q2 and $8.9 billion for H1; capital returns in H1 included $9.1 billion of dividends and $2.1 billion of share repurchases (with $5.6 billion remaining in the buyback program to be completed by end‑2027). Management noted Q2 was aided by one‑time phasing that boosted net sales by ~1 percentage point and core operating income by ~5 percentage points, and that if FX stays at mid‑July levels it would add ~1 percentage point to full‑year net sales and ~1 percentage point to core operating income.Novartis Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
63
Positive
Cash Flow
70
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 55.63B | 54.81B | 51.72B | 46.66B | 43.46B | 43.97B |
| Gross Profit | 41.41B | 41.12B | 38.90B | 34.19B | 31.88B | 32.24B |
| EBITDA | 22.26B | 22.99B | 20.71B | 18.25B | 14.68B | 30.91B |
| Net Income | 12.76B | 14.06B | 11.94B | 14.85B | 6.96B | 24.02B |
Balance Sheet | ||||||
| Total Assets | 122.03B | 115.57B | 102.25B | 99.94B | 117.45B | 131.79B |
| Cash, Cash Equivalents and Short-Term Investments | 7.69B | 11.59B | 13.35B | 13.96B | 18.61B | 28.11B |
| Total Debt | 49.01B | 37.03B | 31.26B | 26.35B | 27.91B | 31.02B |
| Total Liabilities | 80.09B | 69.02B | 58.12B | 53.20B | 58.03B | 63.97B |
| Stockholders Equity | 41.54B | 46.13B | 44.05B | 46.67B | 59.34B | 67.66B |
Cash Flow | ||||||
| Free Cash Flow | 15.82B | 17.69B | 13.80B | 11.71B | 12.00B | 12.52B |
| Operating Cash Flow | 18.39B | 19.24B | 17.62B | 14.46B | 14.24B | 15.07B |
| Investing Cash Flow | -17.80B | -4.90B | -7.51B | 5.60B | 1.47B | 4.21B |
| Financing Cash Flow | 472.20M | -14.94B | -11.74B | -14.28B | -20.56B | -16.26B |
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
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $321.57B | 36.58 | 17.93% | 2.56% | 2.70% | -48.28% | |
69 Neutral | $103.82B | 22.77 | 5.52% | 5.58% | 23.68% | -30.90% | |
68 Neutral | $286.92B | 23.78 | 29.64% | 3.06% | 2.33% | -4.08% | |
66 Neutral | $443.36B | 123.01 | 68.01% | 2.63% | 10.39% | ― | |
66 Neutral | £195.91B | 25.33 | 21.68% | 1.86% | 4.71% | 21.16% | |
64 Neutral | $142.54B | 19.09 | 8.37% | 7.01% | 1.36% | -5.39% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
NVS
Novartis
156.15
40.58
35.12%
MRK
Merck & Company
130.20
52.92
68.49%
PFE
Pfizer
25.01
3.02
13.75%
SNY
Sanofi
43.08
-3.13
-6.77%
ABBV
AbbVie
250.94
59.68
31.21%
GB:AZN
AstraZeneca
12,632.00
1,686.76
15.41%
Novartis Corporate Events
Novartis Returns to Sales Growth in Q2 2026 but Earnings Weaken as Guidance Reaffirmed
Jul 21, 2026
On July 21, 2026, Novartis reported second-quarter 2026 results showing a return to top-line growth, with net sales up 1% at constant currencies and 3% in U.S. dollars to USD 14.4 billion, driven by strong volume and priority brands such as Kisqal...
Novartis Del-brax Trial Hits Key Biomarker Goals in FSHD, Phase III Under Way
Jun 11, 2026
On June 11, 2026, Novartis reported that the biomarker cohort of its FORTITUDE Phase I/II trial of delpacibart braxlosiran (del-brax) in facioscapulohumeral muscular dystrophy met its primary and key secondary endpoints, showing reductions in KHDC...
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.