NVS
Novartis AG
$153.95
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 52.9% above fair value
You pay
$153.95
Bear
$86.28
Fair
$100.66
Bull
$115.04
Bear
$86.28
-44.0%
$7.19 × 12x P/E
Fair
$100.66
-34.6%
$7.19 × 14x P/E
Bull
$115.04
-25.3%
$7.19 × 16x P/E
Adjust Assumptions
14.0x
7.19$
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
21.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (25 analysts)
$146.00
Divergence from AlphaVal
31%
Summary
Applying a 14x P/E to adjusted EPS of $7.19, the base-case value is $100.66 per share.
Warnings
The company pays out 215% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $146.00 (from 25 analysts). Our estimate is 31% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples