NVSEF
Novartis AG
$145.78
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 18.3% above fair value
You pay
$145.78
Bear
$105.67
Fair
$123.28
Bull
$140.89
Bear
$105.67
-27.5%
$8.81 × 12x P/E
Fair
$123.28
-15.4%
$8.81 × 14x P/E
Bull
$140.89
-3.4%
$8.81 × 16x P/E
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
16.6x
Summary
Applying a 14x P/E to adjusted EPS of $8.81, the base-case value is $123.28 per share.
Warnings
The company pays out 212% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
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