Intrinsic value of Novartis ADR - NVS

Previous Close

$82.27

  Intrinsic Value

$59.65

stock screener

  Rating & Target

sell

-27%

Previous close

$82.27

 
Intrinsic value

$59.65

 
Up/down potential

-27%

 
Rating

sell

We calculate the intrinsic value of NVS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 195.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  51,138
  52,314
  53,658
  55,168
  56,840
  58,675
  60,674
  62,837
  65,167
  67,668
  70,344
  73,199
  76,238
  79,469
  82,897
  86,530
  90,375
  94,442
  98,739
  103,275
  108,062
  113,111
  118,432
  124,039
  129,944
  136,161
  142,706
  149,592
  156,837
  164,457
Variable operating expenses, $m
  27,747
  28,243
  28,810
  29,447
  30,152
  30,926
  31,769
  32,682
  33,665
  34,720
  29,674
  30,878
  32,160
  33,523
  34,969
  36,502
  38,124
  39,839
  41,652
  43,566
  45,585
  47,715
  49,959
  52,324
  54,815
  57,438
  60,199
  63,104
  66,160
  69,374
Fixed operating expenses, $m
  16,863
  17,234
  17,613
  18,001
  18,397
  18,801
  19,215
  19,638
  20,070
  20,511
  20,963
  21,424
  21,895
  22,377
  22,869
  23,372
  23,886
  24,412
  24,949
  25,498
  26,059
  26,632
  27,218
  27,817
  28,429
  29,054
  29,693
  30,347
  31,014
  31,696
Total operating expenses, $m
  44,610
  45,477
  46,423
  47,448
  48,549
  49,727
  50,984
  52,320
  53,735
  55,231
  50,637
  52,302
  54,055
  55,900
  57,838
  59,874
  62,010
  64,251
  66,601
  69,064
  71,644
  74,347
  77,177
  80,141
  83,244
  86,492
  89,892
  93,451
  97,174
  101,070
Operating income, $m
  6,528
  6,837
  7,235
  7,721
  8,292
  8,948
  9,689
  10,517
  11,433
  12,437
  19,707
  20,897
  22,183
  23,569
  25,059
  26,656
  28,365
  30,191
  32,138
  34,212
  36,419
  38,764
  41,255
  43,898
  46,700
  49,669
  52,814
  56,142
  59,663
  63,386
EBITDA, $m
  20,670
  21,162
  21,770
  22,490
  23,322
  24,264
  25,317
  26,482
  27,760
  29,154
  30,667
  32,301
  34,061
  35,950
  37,974
  40,137
  42,446
  44,905
  47,521
  50,302
  53,255
  56,387
  59,707
  63,223
  66,945
  70,883
  75,047
  79,448
  84,098
  89,009
Interest expense (income), $m
  723
  1,541
  1,661
  1,806
  1,972
  2,159
  2,365
  2,592
  2,839
  3,107
  3,395
  3,704
  4,035
  4,388
  4,763
  5,163
  5,586
  6,035
  6,511
  7,014
  7,545
  8,105
  8,697
  9,321
  9,979
  10,672
  11,402
  12,171
  12,980
  13,831
  14,726
Earnings before tax, $m
  4,987
  5,177
  5,429
  5,748
  6,133
  6,582
  7,097
  7,678
  8,326
  9,042
  16,003
  16,862
  17,795
  18,806
  19,896
  21,070
  22,330
  23,680
  25,124
  26,667
  28,313
  30,067
  31,934
  33,919
  36,028
  38,267
  40,643
  43,162
  45,832
  48,660
Tax expense, $m
  1,347
  1,398
  1,466
  1,552
  1,656
  1,777
  1,916
  2,073
  2,248
  2,441
  4,321
  4,553
  4,805
  5,078
  5,372
  5,689
  6,029
  6,394
  6,784
  7,200
  7,645
  8,118
  8,622
  9,158
  9,728
  10,332
  10,974
  11,654
  12,375
  13,138
Net income, $m
  3,641
  3,779
  3,963
  4,196
  4,477
  4,805
  5,181
  5,605
  6,078
  6,601
  11,683
  12,309
  12,991
  13,728
  14,524
  15,381
  16,301
  17,286
  18,341
  19,467
  20,669
  21,949
  23,312
  24,761
  26,300
  27,935
  29,669
  31,508
  33,457
  35,522

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  135,644
  138,764
  142,330
  146,334
  150,770
  155,638
  160,938
  166,676
  172,857
  179,491
  186,588
  194,161
  202,224
  210,793
  219,886
  229,522
  239,722
  250,509
  261,906
  273,940
  286,638
  300,029
  314,144
  329,016
  344,679
  361,171
  378,529
  396,796
  416,012
  436,225
Adjusted assets (=assets-cash), $m
  135,644
  138,764
  142,330
  146,334
  150,770
  155,638
  160,938
  166,676
  172,857
  179,491
  186,588
  194,161
  202,224
  210,793
  219,886
  229,522
  239,722
  250,509
  261,906
  273,940
  286,638
  300,029
  314,144
  329,016
  344,679
  361,171
  378,529
  396,796
  416,012
  436,225
Revenue / Adjusted assets
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
  0.377
Average production assets, $m
  79,673
  81,505
  83,600
  85,951
  88,557
  91,416
  94,530
  97,900
  101,530
  105,427
  109,595
  114,043
  118,779
  123,812
  129,153
  134,813
  140,804
  147,140
  153,835
  160,903
  168,361
  176,227
  184,517
  193,253
  202,453
  212,140
  222,335
  233,064
  244,351
  256,224
Working capital, $m
  1,739
  1,779
  1,824
  1,876
  1,933
  1,995
  2,063
  2,136
  2,216
  2,301
  2,392
  2,489
  2,592
  2,702
  2,818
  2,942
  3,073
  3,211
  3,357
  3,511
  3,674
  3,846
  4,027
  4,217
  4,418
  4,629
  4,852
  5,086
  5,332
  5,592
Total debt, $m
  30,752
  33,444
  36,522
  39,977
  43,805
  48,006
  52,581
  57,532
  62,867
  68,592
  74,716
  81,252
  88,210
  95,605
  103,452
  111,768
  120,571
  129,880
  139,716
  150,101
  161,059
  172,616
  184,797
  197,632
  211,149
  225,381
  240,362
  256,126
  272,710
  290,153
Total liabilities, $m
  117,061
  119,753
  122,831
  126,286
  130,114
  134,315
  138,890
  143,841
  149,176
  154,901
  161,025
  167,561
  174,519
  181,914
  189,761
  198,077
  206,880
  216,189
  226,025
  236,410
  247,368
  258,925
  271,106
  283,941
  297,458
  311,690
  326,671
  342,435
  359,019
  376,462
Total equity, $m
  18,583
  19,011
  19,499
  20,048
  20,655
  21,322
  22,049
  22,835
  23,681
  24,590
  25,563
  26,600
  27,705
  28,879
  30,124
  31,444
  32,842
  34,320
  35,881
  37,530
  39,269
  41,104
  43,038
  45,075
  47,221
  49,480
  51,859
  54,361
  56,994
  59,763
Total liabilities and equity, $m
  135,644
  138,764
  142,330
  146,334
  150,769
  155,637
  160,939
  166,676
  172,857
  179,491
  186,588
  194,161
  202,224
  210,793
  219,885
  229,521
  239,722
  250,509
  261,906
  273,940
  286,637
  300,029
  314,144
  329,016
  344,679
  361,170
  378,530
  396,796
  416,013
  436,225
Debt-to-equity ratio
  1.650
  1.760
  1.870
  1.990
  2.120
  2.250
  2.380
  2.520
  2.650
  2.790
  2.920
  3.050
  3.180
  3.310
  3.430
  3.550
  3.670
  3.780
  3.890
  4.000
  4.100
  4.200
  4.290
  4.380
  4.470
  4.550
  4.630
  4.710
  4.780
  4.860
Adjusted equity ratio
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,641
  3,779
  3,963
  4,196
  4,477
  4,805
  5,181
  5,605
  6,078
  6,601
  11,683
  12,309
  12,991
  13,728
  14,524
  15,381
  16,301
  17,286
  18,341
  19,467
  20,669
  21,949
  23,312
  24,761
  26,300
  27,935
  29,669
  31,508
  33,457
  35,522
Depreciation, amort., depletion, $m
  14,142
  14,325
  14,535
  14,770
  15,030
  15,316
  15,628
  15,965
  16,328
  16,717
  10,960
  11,404
  11,878
  12,381
  12,915
  13,481
  14,080
  14,714
  15,383
  16,090
  16,836
  17,623
  18,452
  19,325
  20,245
  21,214
  22,234
  23,306
  24,435
  25,622
Funds from operations, $m
  17,783
  18,104
  18,498
  18,966
  19,507
  20,121
  20,809
  21,570
  22,406
  23,318
  22,642
  23,714
  24,869
  26,109
  27,439
  28,862
  30,381
  32,000
  33,724
  35,558
  37,505
  39,572
  41,763
  44,086
  46,546
  49,149
  51,903
  54,815
  57,892
  61,144
Change in working capital, $m
  34
  40
  46
  51
  57
  62
  68
  74
  79
  85
  91
  97
  103
  110
  117
  124
  131
  138
  146
  154
  163
  172
  181
  191
  201
  211
  223
  234
  246
  259
Cash from operations, $m
  17,749
  18,064
  18,452
  18,915
  19,450
  20,059
  20,741
  21,496
  22,326
  23,233
  22,551
  23,617
  24,765
  26,000
  27,323
  28,739
  30,250
  31,862
  33,578
  35,403
  37,342
  39,400
  41,582
  43,895
  46,345
  48,938
  51,680
  54,581
  57,646
  60,885
Maintenance CAPEX, $m
  -7,809
  -7,967
  -8,151
  -8,360
  -8,595
  -8,856
  -9,142
  -9,453
  -9,790
  -10,153
  -10,543
  -10,960
  -11,404
  -11,878
  -12,381
  -12,915
  -13,481
  -14,080
  -14,714
  -15,383
  -16,090
  -16,836
  -17,623
  -18,452
  -19,325
  -20,245
  -21,214
  -22,234
  -23,306
  -24,435
New CAPEX, $m
  -1,587
  -1,832
  -2,095
  -2,352
  -2,606
  -2,859
  -3,113
  -3,370
  -3,631
  -3,896
  -4,169
  -4,448
  -4,736
  -5,033
  -5,341
  -5,660
  -5,991
  -6,336
  -6,694
  -7,068
  -7,458
  -7,865
  -8,291
  -8,735
  -9,200
  -9,687
  -10,196
  -10,729
  -11,287
  -11,872
Cash from investing activities, $m
  -9,396
  -9,799
  -10,246
  -10,712
  -11,201
  -11,715
  -12,255
  -12,823
  -13,421
  -14,049
  -14,712
  -15,408
  -16,140
  -16,911
  -17,722
  -18,575
  -19,472
  -20,416
  -21,408
  -22,451
  -23,548
  -24,701
  -25,914
  -27,187
  -28,525
  -29,932
  -31,410
  -32,963
  -34,593
  -36,307
Free cash flow, $m
  8,354
  8,264
  8,207
  8,203
  8,250
  8,344
  8,486
  8,673
  8,906
  9,184
  7,840
  8,209
  8,625
  9,088
  9,601
  10,163
  10,778
  11,446
  12,170
  12,951
  13,794
  14,699
  15,669
  16,708
  17,819
  19,006
  20,271
  21,618
  23,052
  24,578
Issuance/(repayment) of debt, $m
  2,220
  2,692
  3,078
  3,455
  3,829
  4,201
  4,574
  4,952
  5,334
  5,725
  6,125
  6,535
  6,958
  7,395
  7,847
  8,316
  8,803
  9,309
  9,836
  10,385
  10,958
  11,556
  12,181
  12,834
  13,518
  14,232
  14,980
  15,764
  16,584
  17,444
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,220
  2,692
  3,078
  3,455
  3,829
  4,201
  4,574
  4,952
  5,334
  5,725
  6,125
  6,535
  6,958
  7,395
  7,847
  8,316
  8,803
  9,309
  9,836
  10,385
  10,958
  11,556
  12,181
  12,834
  13,518
  14,232
  14,980
  15,764
  16,584
  17,444
Total cash flow (excl. dividends), $m
  10,573
  10,957
  11,285
  11,658
  12,078
  12,545
  13,060
  13,625
  14,240
  14,909
  13,965
  14,744
  15,583
  16,484
  17,448
  18,479
  19,581
  20,755
  22,006
  23,337
  24,752
  26,255
  27,850
  29,543
  31,337
  33,238
  35,251
  37,382
  39,637
  42,021
Retained Cash Flow (-), $m
  -345
  -427
  -489
  -549
  -608
  -667
  -726
  -786
  -847
  -909
  -972
  -1,037
  -1,105
  -1,174
  -1,246
  -1,320
  -1,397
  -1,478
  -1,561
  -1,649
  -1,740
  -1,835
  -1,934
  -2,037
  -2,146
  -2,259
  -2,378
  -2,502
  -2,633
  -2,769
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  10,228
  10,529
  10,796
  11,110
  11,470
  11,878
  12,334
  12,839
  13,393
  14,000
  12,992
  13,707
  14,479
  15,310
  16,202
  17,159
  18,183
  19,277
  20,444
  21,688
  23,012
  24,420
  25,917
  27,505
  29,191
  30,979
  32,873
  34,879
  37,004
  39,252
Discount rate, %
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
  9,797
  9,620
  9,366
  9,108
  8,840
  8,558
  8,259
  7,940
  7,598
  7,234
  6,067
  5,739
  5,387
  5,016
  4,628
  4,230
  3,825
  3,419
  3,020
  2,633
  2,264
  1,918
  1,600
  1,313
  1,058
  837
  649
  493
  367
  266
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Novartis AG is a holding company, which provides healthcare solutions. The Company is engaged in the research, development, manufacturing and marketing of a range of healthcare products led by pharmaceuticals. The Company's segments include Innovative Medicines, Sandoz, Alcon and Corporate activities. Innovative Medicines researches, develops, manufactures, distributes and sells patented prescription medicines to develop health outcomes for patients and healthcare providers. Sandoz develops, manufactures, distributes and sells prescription medicines, as well as pharmaceutical active substances that are not protected by valid and enforceable third-party patents. Alcon researches, develops, manufactures, distributes and sells eye care products. Alcon is a provider of eye care with product offerings in eye care devices and vision care. The Company's range of products includes pharmaceuticals and oncology medicines, generic and biosimilar medicines, and eye care devices.

FINANCIAL RATIOS  of  Novartis ADR (NVS)

Valuation Ratios
P/E Ratio 29.1
Price to Sales 4
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 17
Price to Free Cash Flow 22.7
Growth Rates
Sales Growth Rate -1.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.9%
Cap. Spend. - 3 Yr. Gr. Rate -3.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 23.9%
Total Debt to Equity 31.7%
Interest Coverage 12
Management Effectiveness
Return On Assets 5.6%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 6.8%
Ret/ On T. Cap. - 3 Yr. Avg. 12.2%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 15.7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 64.9%
Gross Margin - 3 Yr. Avg. 66.2%
EBITDA Margin 29.5%
EBITDA Margin - 3 Yr. Avg. 30.2%
Operating Margin 16.8%
Oper. Margin - 3 Yr. Avg. 18.3%
Pre-Tax Margin 15.8%
Pre-Tax Margin - 3 Yr. Avg. 18.3%
Net Profit Margin 13.6%
Net Profit Margin - 3 Yr. Avg. 22.6%
Effective Tax Rate 14.3%
Eff/ Tax Rate - 3 Yr. Avg. 13.5%
Payout Ratio 96.5%

NVS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NVS stock intrinsic value calculation we used $50135 million for the last fiscal year's total revenue generated by Novartis ADR. The default revenue input number comes from 2017 income statement of Novartis ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NVS stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.4%, whose default value for NVS is calculated based on our internal credit rating of Novartis ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Novartis ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NVS stock the variable cost ratio is equal to 54.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16500 million in the base year in the intrinsic value calculation for NVS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Novartis ADR.

Corporate tax rate of 27% is the nominal tax rate for Novartis ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NVS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NVS are equal to 155.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Novartis ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NVS is equal to 3.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $18238 million for Novartis ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2374 million for Novartis ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Novartis ADR at the current share price and the inputted number of shares is $195.3 billion.

RELATED COMPANIES Price Int.Val. Rating
ABT Abbott Laborat 63.32 80.26  buy
AMGN Amgen 190.49 91.73  sell
BMY Bristol-Myers 56.71 54.20  hold
PFE Pfizer 37.33 24.58  sell
SNY Sanofi ADR 42.35 249.10  str.buy
AZN AstraZeneca AD 37.17 55.39  str.buy
JNJ Johnson&Johnso 125.85 126.96  hold
TEVA Teva Pharmaceu 22.93 22.62  buy
MRK Merck&Co 62.52 22.92  str.sell

COMPANY NEWS

▶ Novartis wont raise drug prices in US   [Jul-19-18 06:52PM  Fox Business Videos]
▶ [$$] Novartis Wont Raise U.S. Drug Prices This Year   [Jul-18-18 08:00PM  The Wall Street Journal]
▶ 5 Big Biotech Stories to Watch   [03:07PM  TheStreet.com]
▶ [$$] Novartis Won't Raise U.S. Drug Prices This Year   [10:50AM  The Wall Street Journal]
▶ Novartis: 2Q Earnings Snapshot   [05:02AM  Associated Press]
▶ [$$] Novartis Confirms Outlook   [02:11AM  The Wall Street Journal]
▶ [$$] Chinese Hit Movie Dying to Survive Injects Urgency in Drug-Price Push   [Jul-17-18 10:49PM  The Wall Street Journal]
▶ Earnings Outlook For Novartis   [04:04PM  Benzinga]
▶ [$$] Novartis Played Down Ties to Trump Lawyer Michael Cohen, Report Says   [Jul-13-18 08:04PM  The Wall Street Journal]
▶ Better Know Biotech: Regenxbio Inc.   [08:15AM  Motley Fool]
▶ Kate Warne- Investment Strategist Edward Jones   [Jul-10-18 04:47PM  Yahoo Finance Video]
▶ [$$] China vows to accelerate cancer drug price cuts   [Jul-09-18 08:58AM  Financial Times]
▶ 3 Best Biotech Acquisitions of 2018 (So Far)   [Jul-05-18 08:47AM  Motley Fool]
▶ [$$] Novartis Injects Itself Into Planned Rollout of EpiPen Competitor   [Jul-02-18 07:46PM  The Wall Street Journal]
▶ [$$] Novartis to Spin Off Alcon Eye-Care Business   [Jun-29-18 07:29PM  The Wall Street Journal]
▶ Novartis Surges On Decision To Spin Off Alcon Eye Devices Unit   [04:52PM  Investor's Business Daily]
▶ Novartis Stock Pops on Alcon Spinoff News   [12:41PM  InvestorPlace]
▶ Ron Squarer's risk-taking pays off at Array   [08:30AM  American City Business Journals]
▶ [$$] Novartis to Spin Off Alcon Eye-Care Business   [07:02AM  The Wall Street Journal]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.