Wall Street financial giant Goldman Sachs has downgraded Swiss pharmaceutical giant Novartis AG's stock rating from "Neutral" to "Sell" in its latest research report, while slightly lowering the price target from 95.00 Swiss francs to 94.00 Swiss francs. This suggests Goldman Sachs expects the stock to follow a weakening trajectory over the next 12 months. Novartis AG currently trades around 101 Swiss francs in European equity markets, while Novartis AG (NVS.US) ADR shares in the U.S. market are quoted at $127.70, delivering an impressive 36% year-to-date return that significantly outperformed the S&P 500 index.
The Wall Street financial giant expressed concerns about Novartis AG's growth rate in its research report, predicting that overall growth will be "structurally downgraded" as generic drug market competition intensifies, following a period of three to four years of significant sales growth in the high single-digit to low double-digit range. Despite these growth-related concerns, Goldman Sachs data shows the company maintains excellent financial fundamentals with 12.95% revenue growth over the past twelve months.
However, Goldman Sachs analysts noted in their report that within Europe's large pharmaceutical sector, Novartis AG falls into the "value/innovation laggard" category that is not favored by the market, though it ranks as the best performer within this group across 1-year, 3-year, and 5-year periods, hitting new highs in late August 2025 supported by the company's large share buyback program.
Goldman Sachs stated that with the full market launch of generic versions of "Entresto (sacubitril/valsartan)," Novartis AG's earnings momentum story "becomes less clear," facing significant challenges to overall growth, and noted that positive news flow for the company over the next 12-18 months may appear "quite muted."
Goldman Sachs believes that the valuation multiple expansion Novartis AG enjoyed over the past 12-18 months has not adequately reflected forward-looking growth risks, implying a significant valuation collapse ahead. The latest price target given by Goldman Sachs suggests approximately 8% downside potential for Novartis AG's stock compared to current historically high levels.
However, some Wall Street institutions' analytical reports consider the stock currently undervalued, based on a current trading P/E ratio of 18.66x and dividend yield of 2.03%.
Regarding other recent Wall Street rating updates, another Wall Street financial giant Morgan Stanley upgraded Novartis AG's stock rating from "Underweight" to "Equal Weight" and raised the price target from $91 to $100. Morgan Stanley's latest adjustment reflects slight improvement in Novartis AG's medium-term earnings growth prospects, expecting sales and EBIT to each grow approximately 4% from 2025 to 2028; in comparison, competitor Roche's expected data for the same period shows growth of approximately 3%.
Novartis AG is a global innovative pharmaceutical giant headquartered in Basel, Switzerland, focusing on prescription drugs (having divested its generic drug business). Its sales cover major global markets, with R&D and production operations spanning Europe, America, and Asia. It is one of the world's largest first-tier pharmaceutical companies, though not a "monopolistic pharmaceutical hegemon" in the sense of "dominating alone." From a market capitalization/revenue and global pipeline influence perspective, Novartis AG is among the world's largest multinational pharmaceutical companies, but not a monopolistic "hegemon." The company competes with rivals including Roche, Johnson & Johnson, Pfizer, Merck, and AstraZeneca across various therapeutic areas.
Novartis AG's pharmaceutical product portfolio focuses on oncology, cardiorenal metabolism/cardiovascular, immunology, and neuroscience, with core products including Entresto, Cosentyx, Kesimpta, Kisqali, and Pluvicto, among others.