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Novartis AG (CH:NOVN)
:NOVN
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Novartis AG
(NOVN)
74Outperform
Positive Factors
Future Guidance
Potential for FY25 guidance raise supported by strong operational performance, despite tariff uncertainties.
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.
Sales Growth
Strong sales growth driven by key products like Entresto, Cosentyx, Kisqali, Kesimpta, and Scemblix.
Negative Factors
Patent Expirations
Concerns about Novartis's lack of growth after 2028 due to loss of exclusivity for key drugs.
Tariff Uncertainty
Uncertainty regarding the timing and impact of pharmaceutical tariffs creates near-term challenges.
Trial Delays
The delay of the PIII readout for Pelacarsen to the first half of 2026 is due to a blinded event rate, which can impact the timing of trial conclusions.
Novartis AG (NOVN) vs. S&P 500 (SPY)
Market Cap
CHF175.10B
Dividend Yield3.8%
Average Volume (3M)4.44M
Price to Earnings (P/E)17.7
Beta (1Y)0.85
Revenue Growth-1.03%
EPS Growth-18.94%
CountryCH
Employees75,883
SectorHealthcare
Sector Strength69
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)5.21
Shares Outstanding2,112,421,900
10 Day Avg. Volume3,426,357
30 Day Avg. Volume4,436,632
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
Price to Cash Flow (P/CF)N/A
P/FCF RatioN/A
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
CHF101.92Price Target Upside10.14% Upside
Rating ConsensusHold
Number of Analyst Covering14
Novartis AG Business Overview & Revenue Model
Company DescriptionNovartis 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 MoneyNovartis 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
Income Statement
Balance Sheet
Cash Flow
| 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
Neutral
92.54
Price Trends
94.33
Negative
91.03
Positive
92.46
Negative
Market Momentum
-1.39
Negative
49.52
Neutral
92.00
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:NOVN, the sentiment is Neutral. The current price of 92.54 is above the 20-day moving average (MA) of 91.99, below the 50-day MA of 94.33, and above the 200-day MA of 92.46, indicating a neutral trend. The MACD of -1.39 indicates Negative momentum. The RSI at 49.52 is Neutral, neither overbought nor oversold. The STOCH value of 92.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | CHF175.10B | 17.66 | 3.80% | -1.03% | -18.94% | ||
73 Outperform | CHF211.47B | 25.26 | 26.76% | 3.49% | 3.03% | -27.86% | |
72 Outperform | $38.78B | 42.79 | 4.83% | 0.28% | 2.72% | 2.43% | |
58 Neutral | CHF40.35B | 63.45 | 0.71% | -2.13% | 2.50% | ||
51 Neutral | $5.32B | 3.32 | -40.25% | 2.90% | 17.93% | 2.14% |
* Healthcare Sector Average
Performance Comparison
CH:NOVN
Novartis AG
92.54
6.74
7.86%
CH:LONN
Lonza Group Ltd
573.80
55.37
10.68%
CH:ALC
Alcon
78.52
6.93
9.68%
CH:ROG
Roche Holding AG
261.90
47.78
22.32%
Novartis AG Earnings Call Summary
Earnings Call Date: Jan 31, 2025 | % Change Since: 2.19% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call highlighted a strong performance in 2024 with significant growth across key brands and advancements in the pipeline. However, there are challenges anticipated in 2025 due to potential generic entries and ongoing patent litigations, particularly concerning Entresto.Highlights
Record-Breaking Performance in 2024
Novartis delivered one of the strongest performances in its history with Q4 sales growth of 16% and core operating income growth of 29% in constant currency. For the full year, sales grew 12% and core operating income grew 22%.
Significant Growth Across Priority Brands
Priority brands grew 38% in constant currencies, with Entresto sales up 31% to $7.8 billion, Cosentyx sales growing 25%, Kesimpta growing 49%, and Kisqali achieving a 49% increase in sales.
Pipeline Advancements and Approvals
Notable pipeline advancements include the approvals for Kisqali in early breast cancer and Fabhalta in two indications. The company also announced a promising acquisition in neuroscience with PTC518 for Huntington's disease.
Strong Financial Metrics and Shareholder Returns
Free cash flow reached a record high of $16.3 billion, growing 24%. Novartis proposed its 28th consecutive dividend increase and completed over 30 bolt-on deals to strengthen its pipeline.
Lowlights
Entresto Patent Challenges
There are ongoing patent litigations regarding Entresto, specifically concerning the combination patent and pediatric exclusivity, with a forecasted loss of exclusivity in the U.S. by mid-2025.
Generic Entry Impact Anticipation
Novartis anticipates a softer second half of 2025 due to potential generic entries for Entresto, Tasigna, and Promacta in the U.S., which could impact sales growth.
Pluvicto Sequential Decline
Pluvicto sales in the U.S. experienced a sequential decline quarter-over-quarter, attributed to previous onetime adjustments in European markets.
Company Guidance
In the call, Novartis provided detailed guidance for its financial and operational performance. For 2024, the company achieved 12% sales growth and a 22% increase in core operating income, with margins reaching 38.7%. Key brands demonstrated strong growth, with Entresto achieving $7.8 billion in sales, up 31%, and Cosentyx reaching over $6 billion, growing 25%. The company exceeded its full-year guidance and is confident in continued growth in 2025, projecting mid to high single-digit sales growth and high single to low double-digit core operating income growth. Novartis also outlined its strategy for maintaining a 5% plus sales growth trajectory through 2029, with an aim to achieve a 40% margin by 2027. The call highlighted significant pipeline progress, including advancements in priority brands and upcoming readouts for new therapies that are expected to drive long-term growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.