One-glance verdict
Undervalued
$170.26 our estimate vs market $137.16
Wall Street consensus: $156.56 (-8.0% lower than our fair-value estimate)
19% below our estimate, below the bear case
Fundamentals snapshot
Novartis AG
NVS · NYQ · Healthcare · Drug Manufacturers - General
Current price
$137.16
52-week range
$121.57 - $170.46
Market cap
$260.70B
Balance sheet
Watch
15.42x Strong cushion
Net debt $41.40B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 9.6% last year.
- Reward Returns 30.3% on equity, ahead of 60% of its peers.
- Risk Net debt grew 156.5% over 3 years.
- Risk Stock trades 5.3% above its 5-year average P/E.
What this company does
Novartis AG
Novartis is a global pharmaceutical company that discovers and sells medicines for a wide range of illnesses. Most of its money comes from a handful of key drugs that treat complex diseases in areas like cancer, heart conditions, and immune system disorders, which are protected by patents (exclusive rights to sell a drug for a period of time). Therefore, the company's future success heavily depends on its drug pipeline (the collection of new medicines it is currently developing) to replace older drugs as their patent protection ends.
How the company got here
Novartis was formed in 1996 through the merger of two Swiss companies, Ciba-Geigy and Sandoz, which was one of the largest corporate mergers in history at the time. The roots of these predecessor companies go back more than 250 years, starting with the trade of chemicals and dyes before moving into pharmaceuticals. Over the years, Novartis expanded by acquiring other companies to strengthen its capabilities in areas like vaccines and eye care. Recently, the company has narrowed its focus, spinning off its Alcon eye care division in 2019 and its Sandoz generics and biosimilars (medicines that are very similar to existing biologic drugs) division in 2023 to concentrate on developing new, patented medicines.
What it actually does
Novartis is a pharmaceutical company that researches, develops, and sells prescription medicines for a wide range of health issues. You wouldn't find their products on a typical store shelf, as they are medicines that require a doctor's prescription to be filled at a pharmacy. The company focuses on creating innovative treatments for serious conditions in areas like heart disease, cancer, and immune system disorders. Their goal is to develop breakthrough therapies that can significantly improve and extend people's lives.
Innovative Medicines
This is now the company's sole business segment after spinning off its other divisions. It focuses on discovering, developing, and selling new, patent-protected prescription drugs. Think of these as brand-name medicines that are the result of years of research and are protected from being copied for a certain period. This division is the core of Novartis and generates all of its revenue (the total money earned from sales) by selling these drugs to healthcare providers and patients worldwide. The main areas of focus are heart-related, kidney, and metabolic diseases, cancer, immunology (diseases of the body's defense system), and neuroscience (disorders of the nervous system).
What management is betting on now
Novartis's current strategy is to be a more focused company that leads in creating high-value, innovative medicines. They are concentrating their research and development efforts on four main areas: cardiovascular, immunology, neuroscience, and oncology (the study and treatment of tumors). The company is also investing heavily in advanced technology platforms, like radioligand therapy (a type of targeted cancer treatment) and gene and cell therapy, to develop the next generation of treatments. By selling off its other businesses, management is betting that a leaner, more focused approach on groundbreaking drugs will lead to stronger growth and profitability.
Price history
How the share price has moved
—
Loading price history…
Is it cheap or expensive?
Fair value $170.26 vs current price $137.16
Wall Street consensus is the average analyst price target: $156.56 (-8.0% lower than our fair-value estimate).
Our most-likely fair value is $170.26 a share — about 24.1% above today's price of $137.16, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net debt $41.4B. Interest coverage 15.4x.
Net debt
$41.40B
Interest coverage
15.42x
Novartis AG's profit covers its interest bill about 15.4 times over. which is stronger than most peers shown here.
Watch
Worse cushion
Baseline
Better cushion
NVS
BASELINE
Novartis AG
Total debt $49.01B Interest coverage 15.42x This is the baseline the peer rows are being compared against.
Total debt $49.04B Interest coverage 26.36x +71% vs NVS Carries about 1.7x more debt cushion than NVS.
Total debt $54.91B Interest coverage 38.04x +147% vs NVS Carries about 2.5x more debt cushion than NVS.
Total debt $53.91B Interest coverage 16.29x +6% vs NVS Has roughly the same debt cushion as NVS.
Total debt $63.48B Interest coverage 6.52x -58% vs NVS Carries about 2.4x less debt cushion than NVS.
Total debt $70.88B Interest coverage 6.94x -55% vs NVS Carries about 2.2x less debt cushion than NVS.
What you should know
The case for and against NVS
3 Rewards
3 Risks
Rewards
-
Revenue grew 9.6% last year.
-
Returns 30.3% on equity, ahead of 60% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Net debt grew 156.5% over 3 years.
-
Stock trades 5.3% above its 5-year average P/E.
-
Insider ownership is only 0.0% (peer median: 0.1%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
20.72x
Forward P/E
13.94x
P/B
6.28x
P/S
4.60x
EV/EBITDA
13.10x
PEG ratio
3.21x
Profitability
How much profit each dollar creates
Gross margin
75.0%
Operating margin
34.6%
Net margin
22.5%
ROE
30.3%
ROA
10.2%
Health
Liquidity and balance-sheet strength
Debt / equity
1.17x
Current ratio
0.86x
Quick ratio
0.55x
Total debt
$49.01B
Total cash
$7.62B
Growth
How the business has been compounding
Revenue TTM
$56.69B
Revenue 5Y CAGR
9.3%
EPS TTM
6.62
EPS 5Y CAGR
31.1%
Cash flow
How much cash the business throws off
Operating CF TTM
$19.14B
Free CF TTM
$15.24B
FCF margin
26.9%
Dividend
Shareholder payout
Yield
3.5%
Payout ratio
71.6%
Last ex-div date
2026-03-11