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What’s AstraZeneca’s Valuation in March 2018?

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Mar. 9 2018, Published 3:14 p.m. ET

AstraZeneca’s valuation

AstraZeneca (AZN) is one of the leading pharmaceutical companies worldwide. AstraZeneca is involved in discovering, developing, manufacturing, and commercializing primary care and specialty care products.

The above chart compares revenues and earnings per share (or EPS) for AstraZeneca since 1Q16. AstraZeneca surpassed Wall Street analysts’ estimates with EPS of $1.03 on revenues of ~$5.8 billion during 4Q17 as compared to EPS estimates of $0.71 on revenues of ~$5.4 billion during 4Q17.

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Forward PE

PE multiples represent what one share can buy for an equity investor. As of March 9, 2018, AstraZeneca (AZN) was trading at a forward PE multiple of ~19.3x as compared to the industry average of 12.9x. Some competitors like Eli Lilly (LLY), Merck (MRK), and Pfizer (PFE) are trading at a lower forward PE multiple of 15.8x, 13.0x, and 12.3x, respectively, as compared to AstraZeneca.

Forward EV-to-EBITDA

On a capital-structure-neutral and excess cash-adjusted basis, AstraZeneca currently trades at ~14.3x, which is higher than the industry’s average of ~10.6x as of March 9, 2018. Some competitors like Eli Lilly (LLY), Merck (MRK), and Pfizer (PFE) are trading at a lower forward EV-to-EBITDA multiple of 12.6x, 10.6x, and 10.5x, respectively, as compared to AstraZeneca.

The VanEck Vectors Pharmaceutical ETF (PPH) holds 5.1% of its total investments in AstraZeneca (AZN), 4.0% in Eli Lilly (LLY), 4.9% in Merck (MRK), and 4.9% in Pfizer (PFE).

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