Head-To-Head Review: AbbVie (NYSE:ABBV) & Novartis (NYSE:NVS)

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for AbbVie and Novartis, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AbbVie	0	6	16	5	2.96
Novartis	2	7	1	1	2.09

AbbVie currently has a consensus price target of $214.9524, indicating a potential upside of 4.02%. Novartis has a consensus price target of $123.50, indicating a potential downside of 0.56%. Given AbbVie’s stronger consensus rating and higher probable upside, research analysts clearly believe AbbVie is more favorable than Novartis.

Dividends

AbbVie pays an annual dividend of $6.56 per share and has a dividend yield of 3.2%. Novartis pays an annual dividend of $2.60 per share and has a dividend yield of 2.1%. AbbVie pays out 312.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Novartis pays out 37.8% of its earnings in the form of a dividend. AbbVie has increased its dividend for 53 consecutive years. AbbVie is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares AbbVie and Novartis”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AbbVie	$56.33 billion	6.48	$4.28 billion	$2.10	98.40
Novartis	$50.32 billion	5.21	$11.94 billion	$6.87	18.08

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AbbVie	6.45%	699.66%	13.64%
Novartis	25.64%	41.08%	16.83%

Risk & Volatility

AbbVie has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, Novartis has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500.

Insider and Institutional Ownership

70.2% of AbbVie shares are held by institutional investors. Comparatively, 13.1% of Novartis shares are held by institutional investors. 0.1% of AbbVie shares are held by insiders. Comparatively, 0.0% of Novartis shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

AbbVie beats Novartis on 12 of the 18 factors compared between the two stocks.

About AbbVie

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers Humira, an injection for autoimmune and intestinal Behçet's diseases, and pyoderma gangrenosum; Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn's disease; Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn's disease; Imbruvica for the treatment of adult patients with blood cancers; Epkinly to treat lymphoma; Elahere to treat cancer; and Venclexta/Venclyxto to treat blood cancers. It also provides facial injectables, plastics and regenerative medicine, body contouring, and skincare products; botox therapeutic; Vraylar for depressive disorder; Duopa and Duodopa to treat advanced Parkinson's disease; Ubrelvy for the acute treatment of migraine in adults; and Qulipta for episodic and chronic migraine. In addition, the company offers Ozurdex for eye diseases; Lumigan/Ganfort and Alphagan/Combigan for the reduction of elevated intraocular pressure in patients with open angle glaucoma or ocular hypertension; Restasis to increase tear production; and other eye care products. Further, it provides Mavyret/Maviret to treat chronic hepatitis C virus genotype 1-6 infection; Creon, a pancreatic enzyme therapy; Lupron to treat advanced prostate cancer, endometriosis and central precocious puberty, and patients with anemia caused by uterine fibroids; Linzess/Constella to treat irritable bowel syndrome with constipation and chronic idiopathic constipation; and Synthroid for hypothyroidism. It has collaborations with Calico Life Sciences LLC; REGENXBIO Inc.; Janssen Biotech, Inc.; and Genentech, Inc., as well as collaboration with Tentarix Biotherapeutics, LP to develop conditionally-active and multi-specific biologics for oncology and immunology. The company was incorporated in 2012 and is headquartered in North Chicago, Illinois.

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.