Should Value Investors Buy Novartis Stock?

Novartis (NVS), a drug specialist based in Basel, Switzerland, has an extensive portfolio of drugs, many of which are used for oncological purposes. NVS therapies and drugs are also used to treat respiratory diseases, brain-related ailments, dermatological issues, cardio-metabolic challenges, immunological problems, and more.

This healthcare pioneer's roots date all the back to the late 19th century. NVS has stayed in business for good reason. The company's drugs and therapies have legitimate merit. Perhaps most important is the fact that NVS's drug researchers continue to push the envelope with breakthrough innovations.

Is NVS a Buy after its slow first half to 2021? Is the stock destined to move sideways or even decline in the months ahead? I answer those questions below.

Points of Note

NVS is currently priced at $92.15. The stock's 52-week high is $98.52, while its 52-week low is $77.04. NVS has a forward P/E ratio of 14.93, indicating it is undervalued. 

The company is seeing strong momentum with psoriasis drug Cosentyx, heart drug Entresto, and gene therapy medication Zolgensma. Multiple sclerosis drug Kesimpta is also performing well after a couple of weak quarters. 

The launch of breast cancer drug Piqray and multiple sclerosis drug Mayzent is also expected to boost sales. Management is looking to restructure the business to become a core drug-focused company. 

POWR Ratings

NVS is a POWR Ratings monster with an overall grade of A, which translates into a Strong Buy rating in our POWR Ratings system. The company also has a Stability Grade of A and Bs in the Value, Quality, and Growth components. You can find out how NVS grades in the rest of the POWR Ratings components, including Momentum and Sentiment, by clicking here.

Out of the 215 stocks in the Medical - Pharmaceuticals industry, NVS is ranked second overall. You can find other top stocks in this industry by clicking here. 

Click here to checkout our Healthcare Sector Report for 2021

What Analysts are Saying About NVS

Overall, analysts view NVS as underpriced. If the stock reaches the average analyst price target of $105.79, it will have popped by nearly 15%. The highest analyst target price for the stock is $126.10.

In the previous 99 days, the stock's average analyst price target has increased by $2.82. In the past 173 days, the stock's average upside potential has been an impressive 21.41%.

Is NVS a Buy for Value Investors?

Yes. NVS is a Buy for those who emphasize value when investing. Take a close look at the individual POWR Rating component grades, and you will find the stock has a Value Grade of B. Couple this with an overall rating of Strong Buy, and investors have all the more reason to add shares of NVS to their portfolio.

NVS shares were trading at $91.70 per share on Friday morning, up $0.14 (+0.15%). Year-to-date, NVS has declined -0.53%, versus a 20.46% rise in the benchmark S&P 500 index during the same period.

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.

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