A Look at Novartis (SWX:NOVN) Valuation Following Strong Earnings and Major Ianalumab Trial Results

Novartis (SWX:NOVN) delivered a one-two punch this week by reporting stronger earnings and unveiling new data from its Phase III ianalumab studies in Sjogren's disease at a top rheumatology conference. Both updates are attracting investor attention.

See our latest analysis for Novartis.

After a steady climb most of the year, Novartis shares are showing renewed momentum, with a 16.92% year-to-date share price return and a 1.84% bump following this week’s headline-grabbing earnings and ianalumab trial results. In a longer view, total shareholder return stands at an impressive 16.7% for one year and nearly 69% over five years. This highlights a track record of sustained value creation as positive news continues to build investor confidence.

If Novartis’s latest breakthroughs have sparked your interest in healthcare leaders, this could be the perfect moment to discover See the full list for free.

With shares trading near analyst targets after recent gains, the key question for investors is whether Novartis still offers room for upside or if the market has already priced in these advances and future growth potential.

Most Popular Narrative: Fairly Valued

With Novartis closing at CHF104.08 and the narrative suggesting a fair value of CHF102.12, market expectations and fundamental forecasts are closely aligned. This creates a story of equilibrium rather than strong directional bets.

Operational efficiency gains from portfolio streamlining (for example, previous spin-offs and exiting non-core lines) and productivity improvements are driving core margin expansion and higher free cash flow. These can be reinvested in R&D and shareholder returns, supporting long-term earnings and net margin growth.

Read the complete narrative.

What if this margin expansion forecast is just the beginning? The real narrative hinges on how operational moves today are expected to supercharge future profits and shape Novartis’s fair value years ahead. The full story unpacks the earnings potential, future margins, and bold assumptions analysts are using to frame the price. Find out what’s moving the needle behind the scenes.

Result: Fair Value of $102.12 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, regulatory uncertainties and the looming threat of generic competition for key drugs could challenge Novartis’s growth outlook and shift market sentiment.

Find out about the key risks to this Novartis narrative.

Another View: The SWS DCF Model Suggests Strong Undervaluation

While recent multiples suggest Novartis is fairly priced, our SWS DCF model highlights a strikingly different perspective. According to this method, Novartis shares are trading about 62% below their estimated fair value. Is it possible that the market is overlooking the company’s long-term cashflow potential?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Novartis Narrative

If you see the numbers differently or want to run your own analysis, you can craft a personal view in just a few minutes. Do it your way

A great starting point for your Novartis research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Investment Ideas?

Don’t let great potential pass you by. The next standout company could be on your radar today if you look in the right places. Use these handpicked resources to fuel your portfolio’s growth:

• Boost your income stream by targeting strong yields through these 16 dividend stocks with yields > 3% offering dividend opportunities with attractive returns above 3%.
• Catch the rising stars in artificial intelligence when you put these 24 AI penny stocks to work and pick out AI-powered companies making waves in today’s markets.
• Shape your future with technology by seeking out these 28 quantum computing stocks, where breakthroughs in quantum computing create entirely new investment frontiers.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com