Novartis AG (NOVN) AI Stock Analysis

• Market Cap: CHF179.30B
• Dividend Yield: 3.72%
• Average Volume (3M): 3.98M
• Price to Earnings (P/E): 16.5
• Beta (1Y): 0.85
• Revenue Growth: 6.34%
• EPS Growth: -13.16%
• Country: CH
• Employees: 75,883
• Sector: Healthcare
• Sector Strength: 57
• Industry: Drug Manufacturers - General
• EPS (TTM): 5.71
• Shares Outstanding: 2,112,421,900
• 10 Day Avg. Volume: 3,030,670
• 30 Day Avg. Volume: 3,979,356
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.20
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 5.53
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: CHF101.27
• Price Target Upside: 7.49% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 13

Novartis AG shows a strong financial performance, robust earnings growth, and reasonable valuation, contributing to an overall positive outlook. Key strengths include consistent revenue growth, effective cost management, and strong cash flow. The earnings call further supports a positive sentiment with upgraded guidance and significant product approvals, despite some rollout challenges and geopolitical concerns. Technical indicators suggest caution due to potential overbought conditions.

Positive Factors

Investment and Expansion

Novartis announced a $23bn CapEx investment in the US, which will allow the company to supply 100% of its key medicines end-to-end in the US, significantly increasing its current manufacturing footprint.

Operational Performance

Potential upgrades in earnings per share and guidance are expected.

Sales Growth

Strong sales growth driven by key products like Entresto, Cosentyx, Kisqali, Kesimpta, and Scemblix.

Negative Factors

Loss of Exclusivity

Concerns about Novartis's lack of growth after 2028 due to loss of exclusivity for key drugs.

Pharmaceutical Tariffs

Uncertainty regarding the timing and impact of pharmaceutical tariffs creates near-term challenges.

Product Uptake Challenges

Pluvicto uptake faces challenges with some centers needing to expand their capacity to increase the number of patients.

Novartis AG Business Overview & Revenue Model

Company Description

Novartis AG is a global healthcare company based in Switzerland, engaged in the research, development, manufacturing, and marketing of a wide range of healthcare products. The company operates through two main segments: Innovative Medicines and Sandoz. Innovative Medicines focuses on patented prescription medicines, primarily in the areas of oncology, cardiovascular, renal and metabolism, immunology, dermatology, ophthalmology, neuroscience, and respiratory diseases. Sandoz is a global leader in generic pharmaceuticals and biosimilars, providing affordable medicines across various therapeutic areas.

How the Company Makes Money

Novartis AG generates revenue primarily through the sale of its pharmaceuticals and biosimilars. The Innovative Medicines segment is the largest contributor to the company's revenue, deriving income from the sales of patented prescription drugs. Novartis invests heavily in research and development to innovate and bring new drugs to market, which are often protected by patents, allowing the company to maintain pricing power and market exclusivity for a set period. The Sandoz segment contributes to revenue by producing and selling generic drugs and biosimilars, which are more affordable versions of brand-name drugs. This segment allows Novartis to capture market share in the cost-sensitive healthcare markets. Additionally, strategic partnerships and collaborations with other pharmaceutical companies and research institutions enhance Novartis's capabilities in drug development and commercialization, further contributing to its earnings.

Novartis AG Financial Statement Overview

Summary

Novartis AG demonstrates a robust financial performance with consistent revenue and profit growth. The gross profit margin is approximately 75.7%, indicating effective cost management, and the net profit margin has improved to 24.2%. The balance sheet is healthy, and cash flow is strong, with a free cash flow growth rate of 16.6%.

Income Statement

Novartis AG demonstrates a robust financial performance with consistent revenue and profit growth. The gross profit margin for TTM (Trailing-Twelve-Months) is approximately 75.7%, indicating effective cost management. The net profit margin has improved to 24.2% in the TTM, showcasing enhanced profitability. The revenue growth rate from the previous period is about 2.9%, which is modest but stable. EBIT and EBITDA margins are strong at 29.8% and 41.0% respectively, reflecting operational efficiency.

Balance Sheet

The balance sheet of Novartis AG is healthy, with a debt-to-equity ratio of 0.81, indicating a balanced approach to leverage. The return on equity stands at 33.5% in the TTM, highlighting effective use of shareholders' funds to generate income. The equity ratio is 38.4%, which is reasonable, showing a solid equity base. However, the total assets have slightly decreased, which could be an area of concern if the trend continues.

Cash Flow

The cash flow position of Novartis AG is strong, with a free cash flow growth rate of 16.6% in the TTM, indicating effective cash generation. The operating cash flow to net income ratio is 1.48, suggesting efficient conversion of net income into cash. The free cash flow to net income ratio is 1.25, demonstrating ample free cash flow to support operations and investments.

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	18.25B	14.68B	30.91B	17.21B
	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 AG Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 94.21
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 94.21 is above the 20-day moving average (MA) of 90.87, below the 50-day MA of 94.37, and above the 200-day MA of 92.46, indicating a neutral trend. The MACD of -0.18 indicates Negative momentum. The RSI at 55.50 is Neutral, neither overbought nor oversold. The STOCH value of 85.45 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	81 Outperform	CHF179.30B	16.50		3.72%	6.34%	-13.16%
ALC	79 Outperform	CHF40.57B	44.77	4.83%	0.28%	2.72%	2.43%
ROG	74 Outperform	CHF220.10B	26.23	26.76%	3.46%	3.03%	-27.86%
LONN	58 Neutral	CHF42.18B	67.12		0.66%	-2.13%	2.50%
Sector *	52 Neutral	$5.35B	3.96	-42.60%	2.86%	17.58%	1.27%