Novartis AG (NVS): Today's Featured Drugs Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Novartis ( NVS) pushed the Drugs industry lower today making it today's featured Drugs laggard. The industry as a whole closed the day up 0.1%. By the end of trading, Novartis fell 64 cents (-1.1%) to $59.39 on average volume. Throughout the day, two million shares of Novartis exchanged hands as compared to its average daily volume of 1.9 million shares. The stock ranged in price between $59.36-$59.77 after having opened the day at $59.62 as compared to the previous trading day's close of $60.03. Other companies within the Drugs industry that declined today were: Peregrine Pharmaceuticals ( PPHM), down 15%, Cormedix ( CRMD), down 10%, Cyclacel Pharmaceuticals ( CYCC), down 9.5%, and Tesaro ( TSRO), down 8.7%.

Novartis AG, through its subsidiaries, engages in the research, development, manufacture, and marketing of healthcare products worldwide. Novartis has a market cap of $142.83 billion and is part of the health care sector. The company has a P/E ratio of 15.9, below the average drugs industry P/E ratio of 16.6 and below the S&P 500 P/E ratio of 17.7. Shares are up 5% year to date as of the close of trading on Friday. Currently there are six analysts that rate Novartis a buy, one analyst rates it a sell, and one rates it a hold.

TheStreet Ratings rates Novartis as a buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, largely solid financial position with reasonable debt levels by most measures, increase in net income, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, Sarepta Therapeutics ( SRPT), up 13.8%, Opexa Therapeutics ( OPXA), up 12.9%, Cell Therapeutics ( CTIC), up 11.3%, and Zalicus ( ZLCS), up 9.5%, were all gainers within the drugs industry with Arena Pharmaceuticals ( ARNA) being today's featured drugs industry leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the drugs industry could consider SPDR S&P Pharmaceuticals ETF ( XPH) while those bearish on the drugs industry could consider ProShares UltraShort Nasdaq Biotech ( BIS).
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