Following a period of underperformance, Novartis is now attractively valued versus its pharma peers and its growth outlook. Once the Gilenya patent dispute is fully settled and with a full pipeline of new products, one can assume that the earnings trend has bottomed. The dividend is well-funded, and the balance sheet is strong.
In 2019, Novartis divested its eyecare business Alcon. Ever since then, it is focused on its core pharma businesses (oncology, rheumatology, and biosimilars) which are its key revenue growth drivers. Cash generation is strong, supporting a dividend that is forecast to grow in CHF terms as well as a share buyback program, and the balance sheets are robust. The pipeline expectations are low but could surprise to the upside.