Contrasting Roche (OTCMKTS:RHHBY) & Novartis (NYSE:NVS)

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Roche	$68.73 billion	3.75	$9.40 billion	N/A	N/A
Novartis	$50.32 billion	5.12	$11.94 billion	$6.40	19.05

Novartis has lower revenue, but higher earnings than Roche.

Volatility & Risk

Roche has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500. Comparatively, Novartis has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.

Institutional & Insider Ownership

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Roche	N/A	N/A	N/A
Novartis	24.70%	39.44%	16.43%

Analyst Ratings

This is a summary of recent recommendations for Roche and Novartis, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Roche	1	3	1	2	2.57
Novartis	3	6	1	1	2.00

Novartis has a consensus target price of $123.67, suggesting a potential upside of 1.45%. Given Novartis’ higher probable upside, analysts clearly believe Novartis is more favorable than Roche.

Dividends

Roche pays an annual dividend of $0.87 per share and has a dividend yield of 2.2%. Novartis pays an annual dividend of $2.60 per share and has a dividend yield of 2.1%. Novartis pays out 40.6% of its earnings in the form of a dividend.

Summary

Novartis beats Roche on 9 of the 14 factors compared between the two stocks.

About Roche

Roche Holding AG engages in the pharmaceuticals and diagnostics businesses in Europe, North America, Latin America, Asia, Africa, Australia, and Oceania. The company offers pharmaceutical products in the therapeutic areas of anemia, blood and solid tumors, dermatology, hemophilia, inflammatory and autoimmune, neurological disorders, ophthalmology, respiratory disorders, and transplantation. It is also developing products for various therapeutic areas. In addition, it offers in vitro tests for the diagnosis of various diseases, such as cancer, diabetes, Covid-19, hepatitis, human papillomavirus, and other diseases; diagnostic instruments; and digital health solutions. Roche Holding AG was founded in 1896 and is based in Basel, Switzerland.

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.