NVS
Novartis AG
$159.85
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 21.2% above fair value
You pay
$159.85
Bear
$113.03
Fair
$131.87
Bull
$150.72
Bear
$113.03
-29.3%
$8.51 × 12x P/E
Fair
$131.87
-17.5%
$8.51 × 14x P/E
Bull
$150.72
-5.7%
$8.51 × 16x P/E
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
18.8x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $170.00 from 25 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $131.87 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 $170.00 (from 25 analysts). Our estimate is 30% 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