Novartis (NVS) AI Stock Analysis

• Market Cap: $312.45B
• Dividend Yield: 2.87%
• Average Volume (3M): 2.13M
• Price to Earnings (P/E): 22.8
• Beta (1Y): 0.35
• Revenue Growth: 11.53%
• EPS Growth: -15.21%
• Country: US
• Employees: 75,883
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - General
• EPS (TTM): 2.03
• Shares Outstanding: 2,112,421,900
• 10 Day Avg. Volume: 2,224,208
• 30 Day Avg. Volume: 2,129,995
• PEG Ratio: 0.85
• Price to Book (P/B): 5.79
• Price to Sales (P/S): 4.88
• P/FCF Ratio: 15.11
• Enterprise Value/Market Cap: 1.08
• Enterprise Value/Revenue: 6.00
• Enterprise Value/Gross Profit: 7.92
• Enterprise Value/Ebitda: 14.75
• 1Y Price Target: $137.75
• Price Target Upside: -15.32% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5
• EPS Forecast (FY): 8.91
• Revenue Forecast (FY): $57.23B

• Rating: 77 Outperform
• Price Target: $175.00 ▲(7.58% Upside)
• Action: Reiterated Date: 02/06/26
• Date: Action: Reiterated 02/06/26

Score is driven primarily by strong underlying financial quality (high margins and strong free cash flow) and a bullish technical trend. The key constraints are management’s softer 2026 profit outlook amid significant LOE/generic headwinds and a valuation that looks reasonable rather than clearly discounted.

Positive Factors

High margins & strong free cash flow

Sustained high profitability and cash generation underpin durable financial flexibility. Novartis delivered a 40.1% core margin and $17.6B FCF in 2025; FCF tracked net income (~0.78–0.92x 2023–25), supporting continued R&D, dividends and buybacks even through medium-term headwinds.

Broad multi-blockbuster portfolio

Multiple high-growth brands provide durable revenue diversification. Several priority products posted double- to triple-digit growth in 2025, reducing single-product concentration risk and improving the company’s ability to offset patent expiries and generic erosion over the next 2–6 months and beyond.

Deep late-stage pipeline & disciplined capital allocation

A rich late-stage pipeline plus strategic deals and clear capital return priorities enhance long-term growth optionality. Multiple pivotal readouts in 2026, the Avidity deal and sustained >$10B R&D spend, together with buybacks/dividend increases, support medium-term growth and shareholder returns.

Negative Factors

Rising leverage

Leverage has increased materially, reducing financial flexibility if earnings weaken. Debt-to-equity climbed to ~0.80 by 2025 and operating cash flow still covers only a modest portion of total debt (coverage <1x though improving), heightening sensitivity to slower growth or higher funding costs.

Major 2026 generic/LOE headwinds

Planned and recent U.S. generics (e.g., Entresto, Promacta, Tasigna) create structural near-term revenue pressure. Management expects H1 sales down low-single-digit and H1 core operating income down low-double-digit, meaning margin and earnings headwinds that require sustained offset from new launches.

Regulatory & clinical timing uncertainty

Multiple program timing and data uncertainties can delay launches and revenue realization. Event-rate shortfalls, additional monitoring requests and protocol amendments push pivotal readouts or filings into later periods, increasing development costs and deferring potential commercial contributions.

Novartis 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 patented prescription medications, which are marketed globally. The Innovative Medicines segment contributes the majority of the company's revenue, encompassing sales from both patented drugs and recently launched therapies. The Sandoz division provides a secondary revenue stream through the sale of generic medications and biosimilars, which allow for cost-effective alternatives to branded drugs. Additionally, Novartis engages in partnerships and collaborations with other pharmaceutical companies and research institutions, which can lead to co-development agreements and licensing deals that bolster its earnings. The company also invests in research and development to drive innovation, aiming to bring new products to market that can significantly enhance its revenue potential.

Novartis Financial Statement Overview

Summary

Strong profitability and expanding margins (EBIT/EBITDA into the low-30%/low-40% range) with robust, improving free cash flow. Offsets include a modest 2025 revenue decline and a clear upward leverage trend (debt-to-equity rising to ~0.80), which increases sensitivity if growth softens.

Income Statement

Novartis shows strong profitability with consistently high gross margins (~70–75%) and improving operating efficiency since 2022, as EBIT and EBITDA margins expanded into the low-30% and low-40% range in 2024–2025. Revenue has grown solidly from 2022–2024, though 2025 saw a modest revenue decline (about -2.8%), which is the key near-term softness. Net margins are healthy in 2024–2025 (~23–26%) but have been volatile across the period (notably the unusually high 2021 level), indicating earnings can be influenced by non-recurring factors.

Balance Sheet

The balance sheet is generally solid with strong shareholder returns (return on equity around ~27–32% in 2023–2025). Leverage is moderate but has been trending higher, with debt-to-equity rising from ~0.47 (2022) to ~0.80 (2025) and total debt increasing materially over the last two years. The company remains well-capitalized (equity base is sizable relative to assets), but the upward leverage trend is a clear watch item if profitability or revenue growth softens.

Cash Flow

Cash generation is strong and improving: operating cash flow and free cash flow both increased from 2023 to 2025, and free cash flow growth turned positive in 2024 and accelerated in 2025. Free cash flow closely tracks net income (roughly ~0.78–0.92x in 2023–2025), supporting earnings quality. A key weakness is that operating cash flow covers only a modest portion of total debt (coverage improving but still under 1x), which matters given the rising leverage profile.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	54.81B	51.72B	46.66B	43.46B	43.97B
Gross Profit	41.12B	38.90B	34.19B	31.88B	32.24B
EBITDA	22.99B	20.71B	18.25B	14.68B	30.91B
Net Income	14.06B	11.94B	14.85B	6.96B	24.02B
Balance Sheet
Total Assets	115.57B	102.25B	99.94B	117.45B	131.79B
Cash, Cash Equivalents and Short-Term Investments	11.59B	13.35B	13.96B	18.61B	28.11B
Total Debt	37.03B	31.26B	26.35B	27.91B	31.02B
Total Liabilities	69.02B	58.12B	53.20B	58.03B	63.97B
Stockholders Equity	46.13B	44.05B	46.67B	59.34B	67.66B
Cash Flow
Free Cash Flow	17.69B	13.80B	11.71B	12.00B	12.52B
Operating Cash Flow	19.24B	17.62B	14.46B	14.24B	15.07B
Investing Cash Flow	-4.90B	-7.51B	5.60B	1.47B	4.21B
Financing Cash Flow	-14.94B	-11.74B	-14.28B	-20.56B	-16.26B

Novartis Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 162.67
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: 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 162.67 is above the 20-day moving average (MA) of 155.79, above the 50-day MA of 145.68, and above the 200-day MA of 128.29, indicating a bullish trend. The MACD of 5.64 indicates Negative momentum. The RSI at 70.90 is Negative, neither overbought nor oversold. The STOCH value of 70.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NVS.

Novartis Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MRK	78 Outperform	$301.96B	16.71	―	3.12%	1.59%	58.02%
NVS	77 Outperform	$312.45B	22.81	31.14%	2.87%	11.53%	-15.21%
PFE	73 Outperform	$155.62B	20.13	―	6.65%	4.44%	128.96%
AZN	73 Outperform	£240.98B	31.05	22.34%	1.53%	10.20%	40.57%
SNY	69 Neutral	$110.69B	19.18	6.76%	4.58%	-9.32%	120.62%
ABBV	60 Neutral	$404.24B	95.96	9999.00%	2.87%	7.40%	-53.78%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Novartis Corporate Events

Novartis Posts Strong 2025 Results and Pipeline Wins as It Enters Major Patent-Expiry Year

On February 4, 2026, Novartis reported its financial results for the fourth quarter and full year 2025, highlighting robust full-year performance despite mounting US generic competition. For 2025, net sales rose 8% to USD 54.5 billion with core operating income up 14% at constant currencies and a core operating margin of 40.1%, driven by strong growth in priority brands such as Kisqali, Kesimpta, Pluvicto, Scemblix and Cosentyx, while operating income climbed 25% at constant currencies and net income increased 19%. Free cash flow for the year reached USD 17.6 billion, up 8%, underpinning a proposed 5.7% dividend increase to CHF 3.70 per share for 2025. In the fourth quarter of 2025, net sales were broadly flat at USD 13.3 billion (-1% in constant currencies) as volume gains were offset by generic erosion and US revenue-deduction adjustments, but core operating income still edged higher and key growth brands maintained strong double‑digit momentum. The company also reported multiple late‑stage pipeline advances and regulatory milestones in the quarter, including FDA approval of Itvisma for a broad spinal muscular atrophy population, European approval of Scemblix for newly diagnosed Ph+ chronic myeloid leukemia, and FDA submissions for remibrutinib in chronic inducible urticaria and Pluvicto in an earlier prostate cancer setting. Management emphasized that this performance, combined with strategic pipeline deals such as the planned acquisition of Avidity and solid cash generation, positions Novartis to navigate what it describes as the largest patent expiry in its history in 2026 while remaining on track with its mid‑term financial ambitions.

The most recent analyst rating on (NVS) stock is a Buy with a $171.00 price target. To see the full list of analyst forecasts on Novartis stock, see the NVS Stock Forecast page.

Novartis Files 2025 Annual and Nonfinancial Reports with U.S. SEC

On February 4, 2026, Novartis AG, acting as a foreign private issuer under the U.S. Securities Exchange Act of 1934, filed a Form 6-K with the U.S. Securities and Exchange Commission to furnish its Annual Report 2025 and its Report on Nonfinancial Matters 2025 as exhibits. The filing formally places the company’s 2025 financial and non-financial disclosures into the U.S. public record, reinforcing its ongoing compliance with U.S. reporting requirements and providing investors and other stakeholders with updated transparency on its performance and sustainability-related matters for the 2025 financial year.

The most recent analyst rating on (NVS) stock is a Buy with a $171.00 price target. To see the full list of analyst forecasts on Novartis stock, see the NVS Stock Forecast page.

Novartis Gains FDA Approval for Groundbreaking SMA Gene Therapy

On November 24, 2025, Novartis announced that the FDA approved Itvisma, a gene replacement therapy for spinal muscular atrophy (SMA), making it the first of its kind available for children two years and older, teens, and adults. This approval marks a significant advancement in SMA treatment, offering a one-time dose that replaces the SMN1 gene, potentially reducing the need for chronic treatment. The therapy demonstrated improved motor function and stabilization in clinical trials, with a consistent safety profile. This development is expected to transform the care landscape for SMA and expand access to treatment for older patients, addressing unmet needs in the community.

The most recent analyst rating on (NVS) stock is a Buy with a $151.00 price target. To see the full list of analyst forecasts on Novartis stock, see the NVS Stock Forecast page.

Novartis Projects Strong Growth with Updated Sales Guidance and Strategic Acquisitions

On November 20, 2025, Novartis announced an updated sales growth forecast for 2025-2030, projecting a compound annual growth rate (CAGR) of 5-6%. The company has upgraded its peak sales guidance for key products like Kisqali and Scemblix, reflecting strong momentum from in-market growth drivers and upcoming product launches. Novartis is entering a catalyst-rich period with over 15 potential submission-enabling readouts expected in the next two years, supported by a pipeline of more than 30 potential high-value medicines. The company’s strategic acquisitions, including the planned acquisition of Avidity Biosciences, are expected to bolster its pipeline and strengthen its market position, ensuring continued growth beyond 2030.

The most recent analyst rating on (NVS) stock is a Buy with a $151.00 price target. To see the full list of analyst forecasts on Novartis stock, see the NVS Stock Forecast page.