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Here's Why Novartis (NVS) is a Strong Value Stock

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors alike.

Achieving those goals is made easier with the Zacks Style Scores, a unique set of guidelines that rates stocks based on popular investing methodologies, namely value, growth, and momentum. The Style Scores can help you narrow down which stocks are better for your portfolio and which ones can beat the market over the long-term.

Why Investors Should Pay Attention to This Value Stock

Different than growth or momentum investors, value-focused investors are all about finding good stocks at good prices, and discovering which companies are trading under what their true value is before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to help pick out the most attractive and discounted stocks.

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Novartis (NVS)

Switzerland-based Novartis has one of the strongest and broadest portfolio of oncology drugs and generics, which has enabled it to maintain its dominant position as a top pharma company over the years. It continues to build depth in five core therapeutic areas (Cardiovascular, Immunology, Neuroscience, Solid Tumors and Hematology), strength in technology platforms (Targeted Protein Degradation, Cell Therapy, Gene Therapy, Radioligand Therapy and xRNA) and have a balanced geographic footprint. Novartis’ efforts to strengthen its wide and deep oncology portfolio by developing breakthrough treatments had made it even more formidable in this space. Cosentyx, Entresto, Kesimpta, Zolgensma, Kisqali and Leqvio should fuel growth through 2030 and beyond.

NVS sits at a Zacks Rank #2 (Buy), holds a Value Style Score of B, and has a VGM Score of A. Compared to the Large Cap Pharmaceuticals industry's P/E of 15.2X, shares of Novartis are trading at a forward P/E of 15.8X. NVS also has a PEG Ratio of 1.8, a Price/Cash Flow ratio of 16.7X, and a Price/Sales ratio of 4.4X.

A company's earnings performance is important for value investors as well. For fiscal 2023, three analysts revised their earnings estimate higher in the last 60 days for NVS, while the Zacks Consensus Estimate has increased $0.11 to $6.66 per share. NVS also holds an average earnings surprise of 5.2%.

With strong valuation and earnings metrics, a good Zacks Rank, and top-tier Value and VGM Style Scores, investors should strongly think about adding NVS to their portfolios.

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