Bayer Aktiengesellschaft (OTCMKTS:BAYRY) and Novartis (NYSE:NVS) Financial Survey

Bayer Aktiengesellschaft (OTCMKTS:BAYRY) and Novartis (NYSE:NVS) are both large-cap medical companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, profitability, dividends, earnings, institutional ownership and risk.

Risk and Volatility

Bayer Aktiengesellschaft has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, Novartis has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500.

Profitability

This table compares Bayer Aktiengesellschaft and Novartis’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bayer Aktiengesellschaft	-7.26%	13.94%	4.09%
Novartis	24.70%	39.44%	16.43%

Institutional & Insider Ownership

13.1% of Novartis shares are owned by institutional investors. 0.0% of Novartis shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Bayer Aktiengesellschaft pays an annual dividend of $0.02 per share and has a dividend yield of 0.3%. Novartis pays an annual dividend of $2.60 per share and has a dividend yield of 2.2%. Bayer Aktiengesellschaft pays out -2.2% of its earnings in the form of a dividend. Novartis pays out 40.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a breakdown of current ratings for Bayer Aktiengesellschaft and Novartis, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bayer Aktiengesellschaft	0	1	1	2	3.25
Novartis	3	6	1	1	2.00

Novartis has a consensus target price of $123.38, indicating a potential upside of 6.71%. Given Novartis’ higher probable upside, analysts plainly believe Novartis is more favorable than Bayer Aktiengesellschaft.

Earnings & Valuation

This table compares Bayer Aktiengesellschaft and Novartis”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bayer Aktiengesellschaft	$50.44 billion	0.60	-$2.76 billion	($0.92)	-8.35
Novartis	$50.32 billion	4.85	$11.94 billion	$6.40	18.07

Novartis has lower revenue, but higher earnings than Bayer Aktiengesellschaft. Bayer Aktiengesellschaft is trading at a lower price-to-earnings ratio than Novartis, indicating that it is currently the more affordable of the two stocks.

Summary

Novartis beats Bayer Aktiengesellschaft on 11 of the 16 factors compared between the two stocks.

About Bayer Aktiengesellschaft

Bayer Aktiengesellschaft, together its subsidiaries, operates as a life science company worldwide. It operates through Pharmaceuticals, Consumer Health, and Crop Science segments. The Pharmaceuticals segment offers prescription products primarily for cardiology and women’s health care; specialty therapeutics in the areas of oncology, hematology, and ophthalmology; and diagnostic imaging equipment and digital solutions, and contrast agents, as well as cell and gene therapy. The Consumer Health segment markets nonprescription over-the-counter medicines for self-medication and self-care; and solutions for nutritional supplements, allergy, cough and cold, dermatology, pain and cardiovascular risk prevention, and digestive health. This segment also provides breeding, propagation, and production/processing of seeds, including seed dressing. The company has a collaboration with Acuitas Therapeutics, Inc. to strengthen gene editing programs; Peking University in the area of basic pharmaceutical research; the Swiss Tropical and Public Health Institute in the development of the compound emodepside for the treatment of infection with soil-transmitted helminths; bit.bio Ltd. for the discovery and manufacture of regulatory T cells for use in creating therapeutics; Hologic, Inc. in the field of contrastenhanced-mammography solutions to improve diagnostic imaging for the detection of breast cancer; and Twist Bioscience Corporation centering around the research and development of antibody-based pharmaceuticals, as well as with CrossBay Medical Inc. It distributes its products through wholesalers, pharmacies and pharmacy chains, supermarkets, online and other retailers, and hospitals, as well as directly to farmers. The company has collaboration with Thermo Fisher Scientific. Bayer Aktiengesellschaft was founded in 1863 and is based in Leverkusen, Germany.

About Novartis

Novartis AG engages in the research, development, manufacture, and marketing of healthcare products in Switzerland and internationally. The company offers prescription medicines for patients and physicians. It focuses on therapeutic areas, such as cardiovascular, renal and metabolic, immunology, neuroscience, and oncology, as well as ophthalmology and hematology. Novartis AG has a license and collaboration agreement with Alnylam Pharmaceuticals to develop, manufacture, and commercialize inclisiran, a therapy to reduce LDL cholesterol; and Dawn Health for the development and commercialization of Ekiva, a digital solution designed for people living with Paroxysmal Nocturnal Hemoglobinuria. The company was incorporated in 1996 and is headquartered in Basel, Switzerland.