Novartis AG (NVS): A Bull Case Theory

We came across a bullish thesis on Novartis AG (NVS) on Stock Analysis Compilation’s Substack. In this article, we will summarize the bulls’ thesis on NVS. Novartis AG (NVS)'s share was trading at $120.77 as of 12^th June. NVS’s trailing and forward P/E were 18.93 and 14.31 respectively according to Yahoo Finance.

Novartis presents a compelling long-term investment opportunity driven by strong operating performance, disciplined capital allocation, and a robust pipeline. Core operating income grew 27% in constant currency, reflecting effective operating leverage from strong sales momentum, partially offset by continued R&D investment. Margins expanded meaningfully, with overall operating margins reaching 36.9%, up 370 basis points year over year.

This margin expansion is not seen as a one-off; rather, it’s expected to continue as productivity improvements and innovation-driven operating leverage play out over time. Novartis is structurally transforming into a more focused and efficient business, positioning itself for sustained growth through a combination of solid execution and strategic clarity.

Management has demonstrated an ability to make sound decisions that capitalize on Novartis’s enduring competitive advantages—global scale, brand strength, technological capabilities, and a culture of innovation. The clinical pipeline, comprising around 45 new molecular entities and over 100 total programs, is well-balanced and diversified, reinforcing the company’s ability to drive future revenue and profit growth.

Despite this promising backdrop, the current stock price undervalues the company’s long-term growth trajectory, suggesting a significant discount to intrinsic value. This disconnect between fundamentals and market valuation creates a favorable reward-to-risk profile. As Novartis continues to deliver on margin expansion, pipeline advancement, and strategic focus, investors stand to benefit from both capital appreciation and long-term value creation.

The company’s operational strength, paired with underappreciated growth prospects, positions Novartis as a high-quality investment with upside potential that remains meaningfully underpriced by the market.

Previously, we covered a bullish thesis on Novartis AG (NVS) by Max Dividends, which highlighted Novartis’s appeal to dividend-focused investors, supported by a rising 2.3% yield and conservative 28% payout ratio. The stock has appreciated by 16% since then. Stock Analysis Compilation builds on this with margin expansion, disciplined capital allocation, and a strong drug pipeline driving long-term earnings growth. Together, they position Novartis as a stable, undervalued healthcare leader offering both income and compounding capital appreciation.

Novartis AG (NVS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Novartis AG (NVS) at the end of the first quarter which was 33 in the previous quarter. While we acknowledge the risk and potential of NVS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.