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Novartis AG ADR NVS

Morningstar Rating
$96.30 +0.37 (0.39%)
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Company Report

Novartis: Increasing Our Fair Value Estimate Based on Increased Conviction in Margin Expansion

We are increasing Novartis’ fair value estimate to $98/CHF 88 from $92/CHF 85 largely based on expected margin improvement over the next five years. At Novartis’ R&D day, the firm provided a compelling outlook for margin improvement over the next five years, guiding to over 40% core operating margin by 2027 from 37% currently. We believe this margin expansion looks increasingly likely. Novartis’ main levers in margin improvement are reduced sales and marketing expenditures as a percent of sales. We believe there is operating leverage as future sales growth will largely come from therapeutic areas in which Novartis is already entrenched. The increasing margin outlook also helps support the firm’s wide moat rating.

Price vs Fair Value

NVS is trading at a 2% discount.
Price
$96.30
Fair Value
$42.00
Uncertainty
Medium
1-Star Price
$491.80
5-Star Price
$36.40
Economic Moat
Ppsw
Capital Allocation
Wrdqqybp

Bulls Say, Bears Say

Bulls

Novartis' solid late-stage pipeline should propel long-term growth. The company should launch several new drugs during the next several years in critical therapeutic areas such as rare diseases and oncology.

Bears

The patent loss on multiple sclerosis drug Gilenya creates a significant drag on sales in 2023-24 as generic competition increases.

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News

Trading Information

Previous Close Price
$95.93
Day Range
$95.9596.45
52-Week Range
$79.98105.61
Bid/Ask
$96.91 / $96.99
Market Cap
$197.94 Bil
Volume/Avg
77 / 1.6 Mil

Key Statistics

Price/Earnings (Normalized)
14.18
Price/Sales
4.24
Dividend Yield
3.63%
Dividend Yield (Forward)
3.63%
Total Yield
8.73%

Company Profile

Novartis develops and manufactures innovative drugs. The firm's key areas of drug development include oncology, rare diseases, neuroscience, immunology, respiratory, cardio-metabolic, and established medicines. The company sells its products globally, with the United States representing close to one third of total revenue.
Sector
Healthcare
Industry
Drug Manufacturers - General
Stock Style Box
Large Core
Total Number of Employees
101,703

Competitors

Valuation

Metric
NVS
JNJ
GSK
Price/Earnings (Normalized)
14.1814.728.44
Price/Book Value
5.195.224.55
Price/Sales
4.244.622.03
Price/Cash Flow
13.4018.159.44
Price/Earnings
NVS
JNJ
GSK

Financial Strength

Metric
NVS
JNJ
GSK
Quick Ratio
0.410.860.69
Current Ratio
0.941.210.95
Interest Coverage
11.3520.1610.20
Quick Ratio
NVS
JNJ
GSK

Profitability

Metric
NVS
JNJ
GSK
Return on Assets (Normalized)
11.87%14.22%10.27%
Return on Equity (Normalized)
25.88%35.35%53.26%
Return on Invested Capital (Normalized)
17.42%22.60%21.07%
Return on Assets
NVS
JNJ
GSK

Drug Manufacturers - General Industry Comparables

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Morningstar Rating for Stocks
Economic Moat
Market Cap
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ABBV
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MRK
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RHHBY
Roche Holding AG ADRWzzwd$233.3 Bil
AZN
AstraZeneca PLC ADRNrk$197.5 Bil
PFE
Pfizer IncGjty$162.5 Bil
AMGN
Amgen IncVptb$144.0 Bil
SNY
Sanofi SA ADRMxwbp$116.5 Bil