Novartis Operating Income Rises 17% as Analyst Cites Valuation Premium
Novartis reported annual operating income of $17.07 billion for 2025, up 17.40% year-over-year, while AlphaValue/Baader raised its price target to 136 Swiss francs but maintained a "reduce" rating due to valuation concerns.
Novartis AG reported annual operating income of $17.07 billion for fiscal year 2025, representing 17.40% growth from the prior year's $14.54 billion. The company's operating margin expanded to 31.15% from 28.12% in 2024, with quarterly operating income reaching $3.52 billion.
Revenue for the full year totaled $54.81 billion, up from $51.72 billion in 2024. The 2025 results mark a continuation of operating income growth that accelerated sharply in 2024, when the metric jumped 48.88% from 2023 levels of $9.77 billion.
Following the full-year results, AlphaValue/Baader Europe raised its price target for Novartis to 136 Swiss francs from 128 but maintained a "reduce" rating. The firm cited the company's business mix tilted toward faster-growing areas including oncology, neuroscience, immunology, and cardiovascular, noting that mix can mean steadier demand and a healthier R&D pipeline than peers that have stumbled.
The valuation concern centers on Novartis trading at approximately 22 times estimated 2026 earnings, roughly a 25% premium to AlphaValue's Big Pharma average. The firm said management's 5%-6% sales CAGR target looks achievable but not sufficient to justify the premium valuation.
AlphaValue noted a solid balance sheet that could fund bolt-on acquisitions. Historical data shows Novartis operating income has grown from $8.27 billion in 2016, though the metric experienced volatility including a 20.98% decline in 2022.