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Is Novartis (SWX:NOVN) Undervalued As EU Expands Approval For Its Gene Therapy?

Simply Wall St · 1d ago

Regulators in the United States and European Union have widened access to several gene therapies, with the European Commission approving Novartis (SWX:NOVN) product onasemnogene abeparvovec for a broader group of patients with 5q spinal muscular atrophy.

See our latest analysis for Novartis.

Against this backdrop, Novartis shares are trading at CHF123.26, with a 30 day share price return of 2.97% and year to date share price return of 13.60%. The 1 year total shareholder return of 36.07% points to building longer term momentum.

If this regulatory progress has you thinking about where else growth stories could emerge in healthcare, it may be worth checking out a curated list of 127 healthcare AI stocks.

The recent run in Novartis, backed by gene therapy approvals and solid profitability, raises a simple tension: are shares now reflecting the underlying business, or has sentiment moved faster than fundamentals as you think about valuation next?

Most Popular Narrative: 0.2% Undervalued

On the latest narrative view, Novartis has a fair value of CHF123.55, almost exactly in line with the current CHF123.26 share price. This keeps the focus firmly on the underlying growth story that drives that number.

Novartis' robust pipeline and rapid regulatory progress in advanced therapies (including biologics, gene, and cell therapies) positions the company to benefit from emerging healthcare technologies, potentially accelerating future earnings and margin growth as new high-value products launch.

Read the complete narrative.

Curious what sits behind that near perfect match between price and fair value for Novartis? The narrative leans heavily on future revenue growth, higher margins and a different earnings multiple a few years out. The mix of products it assumes are driving that shift might surprise you.

Result: Fair Value of CHF123.55 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that balance can shift quickly if patent expiries, such as Entresto’s loss of exclusivity, bite harder than expected, or if pricing and reimbursement pressure intensifies.

Find out about the key risks to this Novartis narrative.

Next Steps

With sentiment around Novartis finely balanced between opportunity and caution, now is a good time to review the numbers yourself and decide whether the risk reward trade off suits you, starting with the 4 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Novartis?

If Novartis has sharpened your focus on quality opportunities, do not stop here. Use the Simply Wall Street Screener to uncover more targeted stock ideas.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.