Critical Survey: Novartis (NVS) vs. Its Peers

Novartis (NYSE:NVS) is one of 896 public companies in the “Pharmaceuticals” industry, but how does it weigh in compared to its peers? We will compare Novartis to similar businesses based on the strength of its risk, analyst recommendations, valuation, dividends, institutional ownership, earnings and profitability.

Valuation and Earnings

This table compares Novartis and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Novartis	$54.53 billion	$13.98 billion	31.22
Novartis Competitors	$3.53 billion	$3.15 billion	552.59

Novartis has higher revenue and earnings than its peers. Novartis is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Risk and Volatility

Novartis has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500. Comparatively, Novartis’ peers have a beta of -3.79, suggesting that their average share price is 479% less volatile than the S&P 500.

Institutional and Insider Ownership

13.1% of Novartis shares are owned by institutional investors. Comparatively, 32.6% of shares of all “Pharmaceuticals” companies are owned by institutional investors. 0.0% of Novartis shares are owned by company insiders. Comparatively, 14.2% of shares of all “Pharmaceuticals” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Novartis pays an annual dividend of $3.08 per share and has a dividend yield of 1.9%. Novartis pays out 58.8% of its earnings in the form of a dividend. As a group, “Pharmaceuticals” companies pay a dividend yield of 3.3% and pay out 48.0% of their earnings in the form of a dividend. Novartis lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Profitability

This table compares Novartis and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Novartis	18.11%	41.04%	14.45%
Novartis Competitors	-2,381.34%	-218.59%	-15.77%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Novartis and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Novartis	3	9	6	0	2.17
Novartis Competitors	7798	13891	25790	1038	2.41

Novartis currently has a consensus price target of $152.25, indicating a potential downside of 6.93%. As a group, “Pharmaceuticals” companies have a potential upside of 24.87%. Given Novartis’ peers stronger consensus rating and higher probable upside, analysts plainly believe Novartis has less favorable growth aspects than its peers.

Summary

Novartis peers beat Novartis on 9 of the 15 factors compared.

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.