DCF Studio

    AZN.ST · STO · Healthcare

    AstraZeneca PLC

    Also onConsensus Drift

    Implied value per share

    SEK 1745.08

    Market price

    SEK 1638.50

    Implied upside

    +6.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 9.8288

    AdjustedReports in USD, trades in SEK. Modelled in USD, converted at the end.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Current EV/EBITDA of 136.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    SEK 1745.08+6.5%
    Exit multiple
    SEK 2599.76+58.7%
    Market price
    SEK 1638.50

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn7bn15bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 64.5bnUSD 70.8bnUSD 77.8bnUSD 85.4bnUSD 93.8bn+9.8%
    EBITUSD 11.4bnUSD 12.5bnUSD 13.8bnUSD 15.1bnUSD 16.6bn+9.8%
    NOPATUSD 9.4bnUSD 10.4bnUSD 11.4bnUSD 12.5bnUSD 13.7bn+9.8%
    Add depreciation & amortisationUSD 6.7bnUSD 7.3bnUSD 8.0bnUSD 8.8bnUSD 9.7bn+9.8%
    Less capital expenditureUSD -5.3bnUSD -5.8bnUSD -6.3bnUSD -7.0bnUSD -7.6bn+9.8%
    Less increase in working capitalUSD -623.3mUSD -684.5mUSD -751.8mUSD -825.6mUSD -906.6m+9.8%
    Free cashflow to firmUSD 10.2bnUSD 11.2bnUSD 12.3bnUSD 13.5bnUSD 14.9bn+9.8%
    Discount factor0.96580.90090.84030.78380.7311-
    Present valueUSD 9.9bnUSD 10.1bnUSD 10.4bnUSD 10.6bnUSD 10.9bn+2.4%
    Present Value Of The ForecastUSD 51.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.467Reported 0.205, pulled toward 1.0 (Blume)
    Cost of equity7.24%Risk-free + beta x equity risk premium
    Cost of debt5.45%Interest expense / average total debt
    Market capitalisationUSD 2541.1bn98.9% of capital
    Total debtUSD 29.1bn1.1% of capital, book value as a proxy
    Tax rate17.5%Effective, capped at statutory
    WACC7.21%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 177.55

    83% of EV

    Forecast FCFF, final year
    USD 14.9bn
    Capex at depreciation, working capital in reinvestment
    USD 20.0bn
    Less reinvestment at g/ROIC (21.7% of NOPAT)
    USD -4.3bn
    Capitalised
    USD 15.6bn
    ROIC (reported)
    11.5%
    Terminal value, undiscounted
    USD 340.5bn
    Terminal value, discounted
    USD 249.0bn
    Enterprise value
    USD 300.8bn
    Less net debt
    USD 23.4bn
    Equity value
    USD 277.3bn

    Exit at 20.0x EBITDA

    Value per shareUSD 264.50

    88% of EV

    Terminal value, undiscounted
    USD 526.3bn
    Terminal value, discounted
    USD 384.8bn
    Enterprise value
    USD 436.6bn
    Less net debt
    USD 23.4bn
    Equity value
    USD 413.2bn

    Spread between methods: 39%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.21%262.15287.26321.47370.98449.25
    6.21%201.87214.34230.07250.56278.47
    7.21%162.79169.50177.55187.41199.83
    8.21%135.41139.15143.47148.54154.61
    9.21%115.19117.26119.57122.20125.23

    Outlined: this model. Green text: above today's price of 166.70. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year9.8%8.4%-1.4pp
    EBIT margin17.7%16.3%-1.4pp
    Discount rate7.2%7.5%+0.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.