# Novartis AG (SWX:NOVN)

As of Sun 8 Nov 2026 12:00 UTC (weekly snapshot). Full report: https://standard-equity.report/SWX/NOVN

Price CHF 133.08 (CHF), market cap CHF 251.3B, Healthcare - Drug Manufacturers - General.

## Valuation

- SE Reference Value (expected value, DCF): CHF 141.51 (central 50% range CHF 117.14 to CHF 176.54), +6% against the price; range width narrow
- SE Grade: 1 of 3 (Value 2, Quality 3, Moat 1)
- Consensus Rating: Hold (Strong buy 4, Buy 4, Hold 11, Sell 1, Strong sell 3)
- Consensus Price (mean): CHF 128.35, -4% against the price

## Key metrics

Financials in USD. Peer percentile: 100 = best in the peer group.

| Metric | Now | 5Y median | 10Y median | Peers |
|---|---|---|---|---|
| Revenue | $57.36B | CAGR 2.6% | CAGR 1.5% | P77 |
| Revenue growth | 1.8% | 7.4% | 5.6% | P20 |
| Gross margin | 75.2% | 74.1% | 71.8% | P72 |
| Operating margin | 31.9% | 24.9% | 20.9% | P70 |
| Net margin | 17.5% | 24.7% | 23.6% | P59 |
| FCF yield | 5.0% | 7.1% | 6.7% | P60 |
| FCF margin | 27.3% | 31.0% | 28.5% | P93 |
| FCF / net income | 1.56x | 1.26x | 1.31x | P67 |
| ROIC | 20.1% | 15.1% | 10.9% | P53 |
| ROE | 24.6% | 28.0% | 17.0% | P68 |
| ROA | 8.6% | 12.6% | 9.3% | P66 |
| EPS | $5.27 | CAGR 15.3% | CAGR 11.0% | - |
| EPS growth | -29.0% | 21.9% | 16.2% | P21 |
| Book value per share | $19.54 | CAGR -0.9% | CAGR -3.0% | - |
| FCF per share | $8.22 | CAGR 10.8% | CAGR 9.4% | - |
| Dividend per share | $4.67 | CAGR 6.6% | CAGR 6.2% | - |
| Dividend yield | 2.9% | 3.9% | 3.8% | P71 |
| Payout ratio (FY2025) | 65.3% | 65.3% | 65.5% | P81 |
| Diluted shares | 1,888.6M | CAGR -3.2% | CAGR -2.3% | P96 |
| Buyback yield | 1.8% | 2.8% | 1.6% | P96 |
| Debt/equity | 1.29x | 0.57x | 0.50x | P24 |
| Enterprise value | $345.4B | CAGR 2.5% | CAGR 2.9% | P83 |
| Long-term debt | $38.38B | CAGR 1.1% | CAGR 5.7% | P83 |

## Company Note (Q3 2026)

Written by AI from the data above.

**Novartis returned to growth** in the third quarter. Revenue of $15.03B rose 4.7%, as priority brands grew 29% on Kisqali, Kesimpta, Scemblix and Leqvio. Gross margin gains and SG&A productivity drove core margin expansion, and Pluvicto grew on ex-U.S. momentum and U.S. pre-taxane use. Reported diluted EPS of $0.63 fell 68.8%. We judge the stock fairly priced, with Quality and Moat already paid for: SE fair value of CHF 142 is 6.3% above the price.

**Management raised full-year core operating income guidance** to in line to growing low double digits, up from a low single-digit decline. Full-year net sales growth stayed at low single digits, and second-half sales growth stayed at mid to high single digits. Analysts pressed on the ianalumab approval delay. The CEO said, "We do expect an action by the end of the year." The PSMAddition launch in prostate cancer ramps into next year, and a remibrutinib MS filing is due this quarter.

**Consensus has adjusted EPS rising** 0.3% in FY2026 and then 11.0% in FY2027, so the gain the raised guidance points to lands mostly next year. FY2026 revenue growth is forecast at 1.3%. The price implies revenue growth of 4.3% a year, 3.1pp above that consensus, so the market already counts on the second-half acceleration lasting. EPS has beaten estimates in 6 of the last 8 quarters.

**Profitability has stepped up sharply**. Operating margin moved from 21.2% in FY2022 to 33.5% in FY2025. ROE rose from 11.0% to 31.0% over the same span. ROIC climbed from 11.1% to 24.5%. FCF margin has held steady at 27.3%, with no notable gap to its median. These are high returns, but the ten-year record is thinner: ROIC topped 15% in only three of ten years. That shorter history is what keeps the Moat pillar low.

Debt/equity of 1.29x is +127% against its 5Y median, which leaves less balance-sheet room than in past years. SE fair value of CHF 142 is 6.3% above the price, with high confidence. The trailing P/E of 31.0x sits 73% above its 10Y median, though that figure is on reported EPS. The analysts' star- and recency-weighted average target of CHF 128 is 3.6% below the price. For the price to hold, priority brands must outrun Entresto generic erosion in Europe and Xolair biosimilars. Revenue growth slipping back toward the 0.8% of Q2 would show they are not.

**The SE Score** is 1 of 3. Quality earns three stars on ROIC of 24% against a 6.2% cost of capital, with free cash flow covering 104% of net income over five years. Moat earns one star because median ROIC over ten years is 11% and returns topped 15% in only three of those years, despite a stable gross margin. Value earns two stars, with SE fair value near the price. That left the business tier as it was, so the overall score stays at one.

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Weekly snapshot, not live data. For information only, not investment advice. Methodology: https://standard-equity.report/methodology