Novartis AG (NVS): Analysts Giving Thumbs Up or Thumbs Down?

Here’s how investors should make decisions about buying, holding or selling Novartis AG (NYSE:NVS) stock. On Wednesday, shares of Novartis AG (NYSE:NVS) closed higher after an active session. The shares accumulated 1.56 points or 1.73 percent at $91.63 with a heavy trade volume of 2.504 million shares. After opening the session at $90.78, the shares went as high as $91.68 and as low as $90.59, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $235 billion and now has 2.56 billion shares outstanding. Novartis AG (NVS) stock has gained 3.98 percent of market value in 21 trading days.

NVS stock has a trailing 3-year beta of 0.71, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $5.38 a share in the trailing twelve months. The stock’s value has surged 6.78 percent year to date (YTD) against a rise of 10.52 percent in 12 month’s time. The company’s shares still trade -0.82 percent away from its 1-year high of $92.39 and 26.74 percent up from 52-week low of $72.30. The average consensus rating on the company is 1, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Novartis AG (NVS) will probably climb 13.5 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $110.19-month high price target. This represents a whopping 20.26 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $96.17, which represents a return potential of 4.95 percent when compared to the closing price of the stock of $91.63 on Wednesday, March 13. The lowest price target for the stock is $75.13 — slightly more than -18.01 percent from NVS’s current share price.

History has shown that shares in Novartis AG have gone up on 10 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings. Investors will get their next glimpse of NVS’s Q1 earnings on April 24. Analysts are forecasting revenue to climb 1.3 percent to $12.9B in the fiscal first quarter, while earnings are seen soaring by nearly 0 percent to $1.28 per share. It earned $1.25 per share, worse than the $1.28, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $13.3B, better than the $13.2B analysts expected. Earnings are estimated to increase by 66.9 percent this year, 9.22 percent next year and continue to increase by 6.92 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $90.92. Below this, the next support is placed in the zone of $90.21. Till the time, the NVS stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 63.02 on daily chart, which may remain a cause for concern. If the price breaks below $90.21 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $92.01 mark may result into a pull-back move towards $92.39 level.

Shares of Novartis AG (NVS) are trading at a P/E ratio of 16.75 times earnings reported for the past 12 months. The industry NVS operates in has an average P/E of 33.75. Its P/E ratio went as low as 15.95X and as high as 29.89 over the 5-year span.Further, it is sporting a 4.41 on the Price-to-Sales ratio. Compare this with the industry average P/S of 8.71. 67.9 percent is the gross profit margin for Novartis AG and operating margin sits at 15.4 percent. Along with this, the net profit margin is 23.7 percent.