Goldman Sachs downgrades Novartis stock to Sell on growth concerns

Investing.com - Goldman Sachs downgraded Novartis (NYSE:NVS) stock from Neutral to Sell on Friday, while slightly lowering its price target to CHF94.00 from CHF95.00. The stock, currently trading at $127.70, has shown remarkable strength this year with a 34.36% year-to-date return.

The investment bank cited concerns about Novartis’s growth rate, which it expects to "structurally reset lower" in the coming years as generic competition intensifies, following three to four years of high single-digit to low double-digit sales growth. Despite these concerns, InvestingPro data shows the company maintains a GREAT financial health score, with robust revenue growth of 12.95% over the last twelve months.

Goldman Sachs noted that Novartis has been the best performer among "Value Stocks/Innovation Laggards" in the EU Large Pharma space on a 1, 3, and 5-year basis, reaching new highs in late August 2025 after a strong summer supported by the company’s buyback program.

The firm expressed concern that the earnings momentum story for Novartis is "less clear" following the launch of Entresto generics, and pointed to a "fairly quiet" news flow path over the next 12-18 months.

Goldman Sachs believes the multiple expansion Novartis has enjoyed over the past 12-18 months does not adequately reflect forward risks, with its new price target suggesting approximately 8% downside from current levels. However, InvestingPro analysis suggests the stock is currently undervalued, trading at a P/E ratio of 18.66 while offering a 2.03% dividend yield. Discover more insights and detailed valuation metrics with InvestingPro’s comprehensive research report.

In other recent news, Morgan Stanley upgraded Novartis from an Underweight to an Equalweight rating. The investment bank also increased its price target for Novartis to $100.00, up from $91.00. This change reflects an improved mid-term growth profile for Novartis, with projections of 4% sales and EBIT growth between 2025 and 2028. In comparison, Roche is projected to have a 3% growth in the same period. These developments indicate a positive outlook for Novartis in the coming years.

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