Novartis
Note: This is a daily stock update and the information stands true as of 27/10/25, 09:00 CET.
Company Update:
Novartis puts its balance sheet to use in order to further enhance its pipeline. Despite its intrinsic qualities, we expect EPS to grow marginally (1.4% this year and 2% this year), substantially below peers and this acquisition, even though very large is unlikely to move the needle at least over the short term. Novartis is trading a a PE26 of 18.7x, ie a sharp premium to peers such as Novartis (12.4x) or Roche (12.5x). Our expert still believes Roche offers a better risk reward profile.
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Company Update:
Novartis has agreed to acquire US-based neuroscience-focused Avidity Biosciences for $12bn (enterprise value $11bn, because of the latter’s net cash position), which implies a 46% premium to Avidity’s closing price on 24 October 2025. This is Novartis’ biggest acquisition in the last decade, though its balance sheet has enough strength. Note that two of Avidity’s three late-stage candidates hold multi-billion-dollar peak sales potential. However, as part of the deal, Avidity’s cardiovascular pipeline will be spun off into another company.
With Novartis’ cardiovascular drug Entresto losing US patents this year, and a few other drugs about to lose exclusivity in the early 2030s, it has been active in seeking external innovation. Because of the deal, Novartis upgraded its 2024-29 topline outlook, as sales are now expected to compound at 6% (vs. 5% previously). While the deal will dilute profitability by 1-2 percentage points over the next few years, it will not affect this year’s guidance.
Expert Opinion: Novartis puts its balance sheet to use in order to further enhance its pipeline. Despite its intrinsic qualities, we expect EPS to grow marginally (1.4% this year and 2% this year), substantially below peers and this acquisition, even though very large is unlikely to move the needle at least over the short term. Novartis is trading a a PE26 of 18.7x, ie a sharp premium to peers such as Novartis (12.4x) or Roche (12.5x). Our expert still believes Roche offers a better risk reward profile.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
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