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Novartis (SWX:NOVN) is back in the spotlight after a run of clinical updates, including Phase III data for remibrutinib in chronic inducible urticaria and Vanrafia in IgA nephropathy, along with upcoming scientific presentations.
See our latest analysis for Novartis.
These clinical and partnership updates have come alongside a strong run in the shares, with Novartis’ 30-day share price return of 12.07% and year-to-date share price return of 19.45% pointing to building momentum. Meanwhile, the 1-year total shareholder return of 33.27% and 5-year total shareholder return of 104.83% underline how sustained news flow has fed into long term performance.
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With the shares up strongly and trading above the average analyst price target, yet a model-based estimate implying a roughly 50% intrinsic discount, you have to ask yourself: is Novartis still undervalued, or is the market already pricing in future growth?
Novartis last closed at CHF129.60, while the most followed narrative points to a fair value of around CHF116.24, so the story is about whether current optimism goes a step too far.
Operational efficiency gains from portfolio streamlining (e.g., previous spin offs and exiting non core lines) and productivity improvements are driving core margin expansion and higher free cash flow, which can be reinvested in R&D and shareholder returns, supporting long term earnings and net margin growth. Announced $10 billion share buyback program, in addition to a strong dividend and significant free cash flow, enhances potential EPS growth and return on equity, which could result in rerating of the stock as medium term demand and profitability tailwinds materialize. Read the complete narrative.
Want to see what earnings, margins and future P/E the narrative is baking in to support that higher fair value? The key assumptions may surprise you.
The fair value estimate uses a 3.91% discount rate and ties together expectations for steady revenue growth, higher profit margins and fewer shares on issue over time. It blends those inputs into a CHF116.24 figure, which sits below the current price and implies that, if the narrative proves accurate, upside might already be largely reflected in today’s level.
Result: Fair Value of CHF116.24 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, those assumptions could be challenged if key drugs face faster generic pressure, or if pricing reforms and tighter reimbursement hit revenue and margins harder than expected.
Find out about the key risks to this Novartis narrative.
So far, the narrative points to Novartis looking 11.5% overvalued at around CHF116 per share. Our DCF model tells a very different story, suggesting fair value of roughly CHF256.74, which is about a 49.5% discount to the current price. When two models disagree this much, which one do you trust more?
Look into how the SWS DCF model arrives at its fair value.
NOVN Discounted Cash Flow as at Feb 2026
With such a mixed picture on value, sentiment and news flow, it helps to move fast, check the full data and decide where you stand based on the balance of 5 key rewards and 1 important warning sign.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NOVN.SW.
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