Is Novartis AG ADR (NVS) overvalued?
On Equity Rank's model estimate, NVS trades close to its fair value (8% below it). Novartis AG ADR (NVS) last closed at $162.55; the multi-method model fair value is $176.61.
| Price | Model fair value | Price vs model |
|---|---|---|
| $162.55 | $176.61 | 8% below |
What the answer rests on
- 4 of 9 valuation methods put NVS's value above its price and 5 put it below, so the methods disagree.
- To justify today's price, NVS's free cash flow would need to grow about -0.5% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 15.2% a year.
- NVS trades at 31.5 times its last year's earnings, against a median of 27.2 for 14 profitable Drug Manufacturer companies.
- Over the past year the price sat below the model fair value on 19% of trading days. The gap ranged from 13% below to 27% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind NVS's fair value · What prices assume · Other companies