NVS is an impressive company that began trading on the New York Stock Exchange in mid-2000 at $34. Revenues were $20 billion; share earnings were $1.55; and the dividend was 47 cents for each American depository receipt. Last year, revenues grew to $58 billion, and NVS posted earnings of $4.40 a share. The dividend, which increased in each of the past 14 years, has grown sixfold, to $2.82, and the stock price has tripled. The coming years may be just as prolific and profitable as the previous years. As a long-term growth and income investment, NVS should give you a lot of zip for your doo-dah. Though its atonal-1 treatment probably will be a high-demand application, it won’t have the long-term impact of popular drugs such as Celebrex, Viagra, Valium, Lorazepam, etc., which are maintenance drugs and repeatedly purchased to treat conditions that are episodic or permanent. Still, it very likely will improve NVS’ earnings.
NVS is also a superb investment because it has a wide economic moat with the support of many patents, a powerful distribution network, economies of scale and hugely diverse operations. NVS’ industry-leading and impressive late-stage pipeline nearly guarantees long-term growth. The company’s revenue and earnings stability is a result of its multiple-segment approach, which has produced impressive drugs for multiple sclerosis, cancer and eye disorders, as well as vaccines and prominent treatments for skin problems, high blood pressure, gastrointestinal conditions and other conditions. NVS is a classy company that analysts believe could earn $6 a share by 2018 on $68 billion in revenues and have a $3.25 dividend. And if those projections are accurate, NVS could trade between $145 and $160.