Novartis (NVS) AI Stock Analysis

• Market Cap: $235.15B
• Dividend Yield: 3.22%
• Average Volume (3M): 1.09M
• Price to Earnings (P/E): 17.8
• Beta (1Y): 0.33
• Revenue Growth: 12.38%
• EPS Growth: -12.67%
• Country: US
• Employees: 75,883
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - General
• EPS (TTM): 2.42
• Shares Outstanding: 2,112,421,900
• 10 Day Avg. Volume: 1,083,823
• 30 Day Avg. Volume: 1,088,125
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 4.81
• Enterprise Value/Gross Profit: 8.60
• Enterprise Value/Ebitda: 15.80
• 1Y Price Target: $113.75
• Price Target Upside: -8.34% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 78 Outperform
• Price Target: $129.00 ▲(3.95% Upside)

Novartis's strong financial performance and positive earnings call are the most significant factors driving the score. The company's robust profitability, efficient operations, and strategic investments are complemented by a positive market outlook and shareholder-friendly initiatives like the share buyback program. However, technical indicators suggest caution due to overbought conditions, and valuation metrics indicate a fair price, balancing growth and income potential.

Positive Factors

Strong Revenue Growth

The consistent revenue growth indicates a robust market position and effective product portfolio, supporting long-term financial stability and expansion.

Cash Generation Ability

Strong cash flow growth enhances financial flexibility, enabling strategic investments, debt reduction, and shareholder returns, which are crucial for sustainable growth.

Strategic Partnerships

The collaboration with BioArctic could lead to innovative treatments, expanding Novartis's product pipeline and strengthening its competitive edge in neurodegeneration.

Negative Factors

Cosentyx Growth Moderation

Slowing growth of key products like Cosentyx could impact revenue streams and market share, challenging Novartis's ability to maintain its growth trajectory.

China Market Slowdown

The slowdown in China, a significant market, could dampen sales growth and affect Novartis's global revenue, posing a challenge to its international expansion strategy.

Entresto Generic Challenges

The entry of generics could erode Entresto's market share and profitability, impacting Novartis's revenue from one of its key products, necessitating strategic adjustments.

Novartis Business Overview & Revenue Model

Company Description

Novartis AG is a global healthcare company based in Switzerland, focused on the research, development, manufacturing, and marketing of innovative pharmaceuticals and generics. The company operates through two main business segments: Innovative Medicines, which includes patented drugs primarily aimed at treating diseases in areas such as oncology, cardiology, immunology, and neuroscience, and Sandoz, which specializes in generic pharmaceuticals and biosimilars. Novartis is committed to addressing the evolving needs of patients worldwide through its extensive portfolio of medications and therapies.

How the Company Makes Money

Novartis generates revenue primarily through the sale of prescription medicines and pharmaceuticals, with its Innovative Medicines segment contributing the majority of its earnings. Key revenue streams include sales from patented drugs, which often have higher profit margins, as well as revenue from the Sandoz division, which provides a range of generic drugs and biosimilars at lower price points. The company also benefits from strategic partnerships and collaborations with other pharmaceutical companies and research institutions, which can lead to shared development costs and access to new markets. Additionally, Novartis invests heavily in research and development to bring new drugs to market, which can result in significant revenue growth from new product launches.

Novartis Financial Statement Overview

Summary

Novartis demonstrates solid financial health with strong profitability metrics, efficient cash flow management, and a balanced capital structure. The company is on a stable growth trajectory, though further improvement in revenue growth could enhance future prospects. Leverage is moderate, supporting sustainable long-term operations.

Income Statement

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

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

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	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
EBITDA	20.71B	18.29B	14.73B	17.13B	15.24B
Net Income	11.94B	14.85B	6.96B	24.02B	8.07B
Balance Sheet
Total Assets	102.25B	99.94B	117.45B	131.79B	132.06B
Cash, Cash Equivalents and Short-Term Investments	13.35B	13.96B	18.93B	28.33B	11.56B
Total Debt	31.26B	26.35B	27.96B	31.09B	38.05B
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 Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 124.10
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• 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 124.1 is below the 20-day moving average (MA) of 125.05, above the 50-day MA of 122.26, and above the 200-day MA of 111.72, indicating a neutral trend. The MACD of -0.19 indicates Positive momentum. The RSI at 51.02 is Neutral, neither overbought nor oversold. The STOCH value of 61.85 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
NVS	78 Outperform	$235.15B	17.79	32.82%	3.22%	12.38%	-12.67%
MRK	75 Outperform	$196.23B	12.11	33.49%	4.12%	2.00%	20.01%
AZN	73 Outperform	$228.99B	27.48	17.25%	2.12%	15.08%	29.15%
PFE	73 Outperform	$135.09B	12.64	12.10%	7.20%	14.72%	―
SNY	72 Outperform	$111.94B	11.32	7.17%	4.86%	-9.32%	120.62%
AMGN	69 Neutral	$146.96B	22.33	89.11%	3.44%	13.10%	110.67%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%