Question

Assuming that Novartis AG (NVS) has an EPS of $3.3, based upon the price-to-earnings ratios for its competitors, the stock price of Novartis is ___?

Company	Ticker	Price per Share	Earnings per Share	Book Value per Share	Price/ Earnings	Price/ Book
Abbott Labs	ABT	54.35	3.69	13.79	14.73	3.94
Bristol-Myers- Squibb	BMY	25.45	1.93	7.33	13.19	3.47
GlaxoSmithKline	GSK	41.3	3.15	6.03	13.11	6.85
Johnson & Johnson	JNJ	62.6	4.58	18.27	13.67	3.43
Merck	MRK	36.25	3.81	10.86	9.51	3.34
Pfizer	PFE	$18.30	$1.20	8.19	15.25	2.23
Average					13.24	3.88

Answer 1

Price of Novartis = industry average P/E*Novartis EPS = 13.24*3.3

=

43.69