February 15, 2024
Top 10 Stock Novartis Buy Recommendation

Latest Research

For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).

360° View: Obermatt 360° View Novartis Buy

360 METRICS	February 15, 2024
VALUE
VALUE	50
GROWTH
GROWTH	61
SAFETY
SAFETY	29
SENTIMENT
SENTIMENT	71
360° VIEW
360° VIEW	58

ANALYSIS: With an Obermatt 360° View of 58 (better than 58% compared with alternatives), overall professional sentiment and financial characteristics for the stock Novartis are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Novartis. The consolidated Value Rank has an attractive rank of 50, which means that the share price of Novartis is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 50% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 61, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 71. But the company’s financing is risky with a Safety rank of 29. This means 71% of comparable companies have a safer financing structure than Novartis. ...read more

RECOMMENDATION: With a consolidated 360° View of 58, Novartis is better positioned than 58% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 50), above-average growth (Growth Rank of 61), and positive market sentiment in the professional investor community (Sentiment Rank of 71), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 29), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of Novartis is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more

---

Sentiment Strategy: Professional Market Sentiment for Novartis positive

SENTIMENT METRICS	February 15, 2024
ANALYST OPINION
ANALYST OPINION	37
OPINIONS CHANGE
OPINIONS CHANGE	39
PRO HOLDINGS
PRO HOLDINGS	100
MARKET PULSE
MARKET PULSE	53
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	71

ANALYSIS: With an Obermatt Sentiment Rank of 71 (better than 71% compared with alternatives), overall professional sentiment and engagement for the stock Novartis is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Novartis. Analyst Opinions are at a rank of 37 (worse than 63% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 39, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 100, which means that professional investors hold more stock in this company than in 100% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 53, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 53% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Novartis and the professional news channels are on the positive side. ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 71 (more positive than 71% compared with investment alternatives), Novartis has a reputation among professional investors that is above-average compared with that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more

---

Value Strategy: Novartis Stock Price Value better than average

VALUE METRICS	February 15, 2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	22
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	58
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	25
DIVIDEND YIELD
DIVIDEND YIELD	88
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	50

ANALYSIS: With an Obermatt Value Rank of 50 (better than 50% compared with alternatives), Novartis shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Novartis. Price-to-Profit (also referred to as price-earnings, P/E) is 58 which means that the stock price compared with what market professionals expect for future profits is lower than for 58% of comparable companies, indicating a good value concerning Novartis's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 25, which means that the stock price is lower as regards to invested capital than for 25% of comparable investments. On the other hand, Price-to-Sales is less favorable than 78% of alternatives (only 22% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 12% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 50, is a buy recommendation based on Novartis's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more

---

Growth Strategy: Novartis Growth Momentum good

GROWTH METRICS	February 15, 2024
REVENUE GROWTH
REVENUE GROWTH	25
PROFIT GROWTH
PROFIT GROWTH	39
CAPITAL GROWTH
CAPITAL GROWTH	71
STOCK RETURNS
STOCK RETURNS	80
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	61

ANALYSIS: With an Obermatt Growth Rank of 61 (better than 61% compared with alternatives), Novartis shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Novartis. Capital Growth has a rank of 71, which means that currently professionals expect the company to grow its invested capital more than 39% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 80 (above 80% of alternative investments). But Sales Growth has only a rank of 25, which means that, currently, professionals expect the company to grow less than 75% of its competitors, and Profit Growth is also low at a rank of 39. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 61, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Novartis, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more

---

Safety Strategy: Novartis Debt Financing Safety below-average

SAFETY METRICS	February 15, 2024
LEVERAGE
LEVERAGE	35
REFINANCING
REFINANCING	16
LIQUIDITY
LIQUIDITY	60
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	29

ANALYSIS: With an Obermatt Safety Rank of 29 (better than 29% compared with alternatives), the company Novartis has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Novartis is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Novartis. Liquidity is at 60, meaning the company generates more profit to service its debt than 60% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 16, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 84% of its competitors. Leverage is also high at a rank of 35, which means that the company has an above-average debt-to-equity ratio. It has more debt than 65% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 29 (worse than 71% compared with alternatives), Novartis has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more

---

Combined financial peformance: Novartis Below-Average Financial Performance

COMBINED PERFORMANCE	February 15, 2024
VALUE
VALUE	50
GROWTH
GROWTH	61
SAFETY
SAFETY	60
COMBINED
COMBINED	40

ANALYSIS: With an Obermatt Combined Rank of 40 (worse than 60% compared with investment alternatives), Novartis (Pharmaceuticals, Switzerland) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Novartis are a good value (attractively priced) with a consolidated Value Rank of 50 (better than 50% of alternatives), show above-average growth (Growth Rank of 61) but are riskily financed (Safety Rank of 29), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 40, is a hold recommendation based on Novartis's financial characteristics. As the company Novartis's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 50) and above-average growth (Obermatt Growth Rank of 61), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 29) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more

Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.