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Novartis AG
(NOVN)
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Rating:74Outperform
Price Target:
CHF141.00
▲(9.86% Upside)
Action:Reiterated
Date:07/22/26
Overall score reflects solid fundamentals (high margins and strong free cash flow) tempered by higher leverage and the notably negative reported TTM revenue growth figure. Technically, the stock is in a healthy uptrend above major moving averages with moderate momentum. Valuation is reasonable with a supportive dividend, and the latest earnings call was broadly constructive with reaffirmed guidance and strong product momentum, though near-term margin and generic-erosion headwinds remain key risks.
Positive Factors
Strong cash generation & high margins
High reported margins and ~ $16B trailing free cash flow provide durable funding for R&D, launches, and shareholder returns. Robust cash generation cushions against revenue volatility, supports continued investment in priority franchises, and preserves strategic flexibility despite a modest FCF decline.
Negative Factors
Rising financial leverage
Debt increasing to roughly $49B and debt/equity ~1.22x meaningfully raises leverage. Higher indebtedness reduces financial flexibility for M&A or cushioning operational setbacks, increases refinancing and interest sensitivity, and amplifies downside if cash flows or launch trajectories weaken.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation & high margins
High reported margins and ~ $16B trailing free cash flow provide durable funding for R&D, launches, and shareholder returns. Robust cash generation cushions against revenue volatility, supports continued investment in priority franchises, and preserves strategic flexibility despite a modest FCF decline.
Read all positive factors
Novartis AG (NOVN) vs. iShares MSCI Switzerland ETF (EWL)
Market Cap
CHF237.20B
Dividend Yield2.86%
Average Volume (3M)2.22M
Price to Earnings (P/E)24.3
Beta (1Y)1.02
Revenue Growth-5.88%
EPS Growth-11.57%
CountryCH
Employees75,267
SectorGeneral
Sector StrengthN/A
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)6.59
Shares Outstanding2,034,819,500
10 Day Avg. Volume2,568,135
30 Day Avg. Volume2,222,947
Financial Highlights & Ratios
PEG Ratio0.66
Price to Book (P/B)5.81
Price to Sales (P/S)4.69
P/FCF Ratio14.54
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
CHF129.58Price Target Upside0.97% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
EPS Forecast (FY)8.8
Revenue Forecast (FY)CHF57.17B
Novartis AG Business Overview & Revenue Model
Company Description
Novartis AG researches, develops, manufactures, distributes, markets, and sells pharmaceutical medicines in Switzerland and internationally. The company offers Entresto, an angiotensin receptorneprilysin inhibitor to treat symptomatic chronic hear...
How the Company Makes Money
Novartis makes money primarily by selling patented, branded prescription medicines. Revenue is generated when its products are purchased by hospitals, pharmacies, governments, insurers, and other healthcare payers, with pricing and volumes influen...
Novartis AG Earnings Call Summary
Earnings Call Date:Jul 21, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 27, 2026
Earnings Call Sentiment Positive
Overall the call presents a positive operational and commercial momentum story: multiple priority brands and launches delivered strong double‑digit growth (KISQALI +43%, Scemblix +89%, LEQVIO +59%, PLUVICTO +43%, Kesimpta +32%) and the company returned to quarter‑on‑quarter sales growth while generating strong free cash flow and maintaining shareholder returns. Key near‑term risks include H1 legacy impacts (net sales down 2%), margin pressure from acquired program costs and one‑time phasing that will reverse in H2, ongoing generic erosion headwinds (notably Entresto), and dependence on several pivotal readouts and regulatory interactions later this year and into 2027. On balance, the breadth and scale of growth across multiple franchises and solid cash generation outweigh the operational and regulatory risks discussed on the call.Positive Updates
Return to Sales Growth and Strong Q2 Results
Net sales grew 1% in constant currencies to $14.4 billion in Q2 2026; core operating income was flat at $5.9 billion. Management reaffirmed full-year 2026 guidance (net sales low single digits growth; core operating income decline low single digits).
Negative Updates
First Half Sales and Margin Pressure
H1 net sales declined 2% and core operating income declined 7%; core operating margin declined 2.3 percentage points to 39.4%, reflecting significant generic erosion in H1 and portfolio mix shifts.
Read all updates
Q2-2026 Updates
Positive
Negative
Return to Sales Growth and Strong Q2 Results
Net sales grew 1% in constant currencies to $14.4 billion in Q2 2026; core operating income was flat at $5.9 billion. Management reaffirmed full-year 2026 guidance (net sales low single digits growth; core operating income decline low single digits).
Read all positive updates
Company Guidance
Novartis reaffirmed its full‑year 2026 guidance: net sales growth of low single digits and core operating income down low single digits, with core net financial results of about $1.7 billion and a core tax rate around 16.5%. In Q2 the company returned to growth with net sales of $14.4 billion (+1% cc) and flat core operating income of $5.9 billion (core operating margin 41.2%, -70 bps); H1 net sales were -2%, H1 core operating income -7% and H1 core margin 39.4% (-230 bps). Free cash flow was $5.6 billion in Q2 and $8.9 billion for H1; capital distribution in H1 was $9.1 billion of dividends and $2.1 billion of buybacks (with $5.6 billion remaining of the $10 billion program to be completed by end‑2027). Management said Q2 included one‑time phasing that added ~1 percentage point to net sales and ~5 percentage points to core operating income, expects H2 net sales to grow mid‑single digits and H2 core operating income to grow mid‑to‑high single digits (noting a roughly $800 million prior‑year Entresto headwind in Q3), and expects a ~+1 percentage‑point FX tailwind to full‑year sales and core operating income if rates remain at mid‑July levels.Novartis AG Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
64
Positive
Cash Flow
77
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 54.79B | 57.13B | 51.72B | 46.66B | 43.46B | 43.97B |
| Gross Profit | 40.70B | 42.86B | 38.90B | 34.19B | 31.88B | 32.24B |
| EBITDA | 22.04B | 23.96B | 20.71B | 18.25B | 14.68B | 30.91B |
| Net Income | 12.65B | 14.65B | 11.94B | 14.85B | 6.96B | 24.02B |
Balance Sheet | ||||||
| Total Assets | 122.36B | 115.49B | 102.25B | 99.94B | 117.45B | 131.79B |
| Cash, Cash Equivalents and Short-Term Investments | 7.71B | 11.58B | 13.35B | 13.96B | 18.61B | 28.11B |
| Total Debt | 49.15B | 37.01B | 31.26B | 26.35B | 27.91B | 31.02B |
| Total Liabilities | 80.30B | 68.97B | 58.12B | 53.20B | 58.03B | 63.97B |
| Stockholders Equity | 41.65B | 46.10B | 44.05B | 46.67B | 59.34B | 67.66B |
Cash Flow | ||||||
| Free Cash Flow | 15.97B | 18.43B | 13.80B | 11.71B | 11.56B | 12.10B |
| Operating Cash Flow | 18.08B | 20.05B | 17.62B | 14.46B | 14.24B | 15.07B |
| Investing Cash Flow | -17.59B | -5.11B | -7.51B | 5.60B | 1.47B | 4.21B |
| Financing Cash Flow | 731.86M | -15.57B | -11.74B | -14.28B | -20.56B | -16.26B |
Novartis AG Technical Analysis
Positive
128.34
Price Trends
126.05
Positive
121.86
Positive
117.61
Positive
Market Momentum
1.15
Negative
57.38
Neutral
80.91
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 128.34 is above the 20-day moving average (MA) of 126.50, above the 50-day MA of 126.05, and above the 200-day MA of 117.61, indicating a bullish trend. The MACD of 1.15 indicates Negative momentum. The RSI at 57.38 is Neutral, neither overbought nor oversold. The STOCH value of 80.91 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CH:NOVN.
Novartis AG Risk Analysis
Novartis AG disclosed 26 risk factors in its most recent earnings report. Novartis AG 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 AG Peers Comparison
UnderperformOutperform
Sector (55)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | CHF237.20B | 24.28 | ― | 2.86% | -5.88% | -11.57% | |
73 Outperform | CHF284.80B | 23.24 | 37.12% | 2.75% | -1.06% | 30.86% | |
73 Outperform | CHF788.59M | 15.05 | ― | 8.99% | 4.74% | -28.96% | |
62 Neutral | CHF30.08B | 55.89 | 7.04% | 1.17% | 0.81% | 165.32% | |
56 Neutral | CHF37.00B | 47.89 | ― | 0.22% | 15.78% | 111.61% | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% | |
46 Neutral | CHF1.34B | -3.81 | ― | 86.75% | -8.06% | -87.00% |
* General Sector Average
CH:NOVN
Novartis AG
125.46
26.16
26.35%
CH:ROP
Roche Holding AG
353.60
91.52
34.92%
CH:BSLN
Basilea Pharmaceutica
64.10
17.60
37.85%
CH:IDIA
Idorsia Ltd
5.00
1.93
62.74%
CH:SDZ
Sandoz Group Ltd
68.24
20.80
43.84%
CH:GALD
Galderma Group AG
158.35
14.66
10.21%
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.