NEW YORK (TheStreet) -- Shares of Novartis (NVS - Get Report) are up 0.88% to $88.27 in pre-market trade after it was reported that the Swiss drugmmaker agreed to take a 15% stake in Gamida Cell, an Israeli developer of stem cell therapies, in a deal that could reach over $600 million, Reuters reports.
Under the agreement, Novartis would immediately invest $35 million in Gamida for the stake and receive an option to fully acquire the company, according to parent company Elbit Imaging (EMITF - Get Report) .
Gamida Cell is 30.8% owned by Elbit Medical Technologies, while Elbit Medical is 86% owned by Elbit Imaging.
TheStreet Ratings team rates NOVARTIS AG as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NOVARTIS AG (NVS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NVS's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 2.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income increased by 1.6% when compared to the same quarter one year prior, going from $2,516.00 million to $2,555.00 million.
- Net operating cash flow has increased to $3,340.00 million or 32.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.89%.
- You can view the full analysis from the report here: NVS Ratings Report