28 Aug

Novartis’s Valuation in August

WRITTEN BY Mike Benson

A look at Novartis

Novartis (NVS), a leading pharmaceutical company, reported EPS of $1.29 on revenues of $13.2 billion in Q2 2018, a 5% growth year-over-year compared to $12.2 billion in Q2 2017. Foreign exchange had a 2% favorable impact on revenues during the quarter.

Novartis’s Valuation in August

The above chart compares revenues and EPS for Novartis since the first quarter of 2017.

Forward PE multiple

On August 28, Novartis was trading at a forward PE multiple of ~15.4x compared to the industry average of ~14.1x. Competitors Johnson & Johnson (JNJ), Eli Lilly (LLY), and GlaxoSmithKline (GSK) are trading at forward PE multiples of 16.1x, 18.6x, and 13.8x, respectively.

Forward EV-to-EBITDA

On a capital structure neutral basis, Novartis currently trades at a forward EV[1. enterprise value]-to-EBITDA multiple of ~13.6x, which is much higher than the industry average of ~11.8x as of August 28. Competitors Johnson & Johnson (JNJ), Eli Lilly (LLY), and GlaxoSmithKline (GSK) are trading at forward EV-to-EBITDA multiples of 12.1x, 14.4x, and 10.1x, respectively, compared to Novartis.

Forward EV-to-revenue multiple

Novartis currently trades at a forward EV-to-revenue multiple of ~4.3x, which is higher than the industry average of ~4.2x as of August 28. Johnson & Johnson (JNJ), Eli Lilly (LLY), and GlaxoSmithKline (GSK) are trading at forward EV-to-revenue multiples of 4.5x, 4.8x, and 3.2x, respectively, compared to Novartis.

The Invesco International Dividend Achievers ETF (PID) holds 2.2% of its total investments in Novartis (NVS).

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