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Novartis AG (NVS) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Novartis AG (NVS)

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Intrinsic Value (DCF)

Current$141.61
→
Intrinsic$158.51
+12%
$103.06$158.51$268.82
Market implies 11% growth for 5 years
NVS appears fairly valued — current price aligns with our DCF estimate.
At $142, the market prices in 11% annual cash flow growth — a moderate expectation aligned with historical trends (14%).
Range: Bear $103 → Bull $269. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →10%12%14%16%
8%$199$217$237$258
10%$133$145$159$172
12%$99$108$117$127
14%$77$84$92$100

Bull Case

  • Bull case ($269) offers 90% upside at 17% growth, 8% discount
  • 11% margin of safety vs. base case estimate
  • Market-implied growth (11%) ≤ historical CAGR (14%)

Bear Case

  • Bear case ($103) implies 27% downside at 11% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$15.71B
Year 2$17.87B
Year 3$20.33B
Year 4$23.13B
Year 5$26.31B
Terminal$416.92B

📐 Model Inputs

Growth Rate13.8%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$13.80BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is NVS stock undervalued or overvalued?
🟡 FAIRLY VALUED

NVS trades at $141.61, within 10% of our $158.51 intrinsic value estimate. At 9.5% WACC and 13.8% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $104.18 (bear) to $237.40 (bull).

What is NVS's intrinsic value?

Using a 5-year DCF model: Base FCF of $13.80B, projected at 13.8% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $19.80B net debt and dividing by 2.04B shares: Bear $104.18 | Base $158.51 | Bull $237.40. Current price $141.61 implies +11% to base case.

How is NVS's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.8% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($342.36B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 24.8x.