Stock of the Day

January 3, 2022

Novartis (NVS)

$109.42
+$2.11 (+2.0%)
Market Cap: $219.34B

About Novartis

Novartis AG engages in the research, development, manufacture, and marketing of healthcare products in Switzerland and internationally. The company offers prescription medicines for patients and physicians. It focuses on therapeutic areas, such as cardiovascular, renal and metabolic, immunology, neuroscience, and oncology, as well as ophthalmology and hematology. Novartis AG has a license and collaboration agreement with Alnylam Pharmaceuticals to develop, manufacture, and commercialize inclisiran, a therapy to reduce LDL cholesterol; and Dawn Health for the development and commercialization of Ekiva, a digital solution designed for people living with Paroxysmal Nocturnal Hemoglobinuria. The company was incorporated in 1996 and is headquartered in Basel, Switzerland.

Novartis Bull Case

Here are some ways that investors could benefit from investing in Novartis AG:

  • Novartis AG has recently been upgraded to a "strong-buy" rating, indicating strong confidence from analysts in the company's future performance.
  • The stock is currently trading at $106.81, which is below the average target price of $123.38, suggesting potential for price appreciation.
  • With a return on equity of 37.24%, Novartis AG demonstrates strong profitability, indicating effective management and a solid investment opportunity.
  • The company reported earnings per share of $1.98, exceeding the consensus estimate, which reflects strong operational performance and financial health.
  • Novartis AG has a market capitalization of $218.32 billion, providing stability and the ability to invest in research and development for future growth.

Novartis Bear Case

Investors should be bearish about investing in Novartis AG for these reasons:

  • Three research analysts have rated the stock with a sell rating, indicating some skepticism about its future performance.
  • The stock has a relatively low beta of 0.58, suggesting lower volatility compared to the market, which may limit potential high returns for aggressive investors.
  • Despite a strong performance, the company has a debt-to-equity ratio of 0.48, which, while manageable, indicates some level of financial leverage that could pose risks in adverse conditions.
  • Novartis AG's current ratio of 1.04 is just above the threshold of 1, suggesting that the company may have limited short-term liquidity to cover its liabilities.
  • Market sentiment may be affected by broader economic conditions, which could impact the stock's performance despite the company's strong fundamentals.

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