Intrinsic Value Assignment | Homework For You

Pfizer was founded in 1894 by Charles Pfizer and Charles Erhart. By the 1950s, Pfizer was established in Belgium, Brazil, Canada, Cuba, Iran, Mexico, Panama, Puerto Rico, Turkey, and the United Kingdom. The company is headquartered in New York. The stock is listed in NYSE, LSE, Euronext, and Swiss exchanges. During the 1980s and 1990s, Pfizer underwent a period of growth sustained by the discovery and marketing of Zoloft, Lipitor, Norvasc, Zithromax, Aricept, Diflucan, and Viagra. Pfizer has recently grown by mergers, including those with WarnerLambert (2000), with Pharmacia (2003), and with Wyeth (2009). Pfizer had the greatest number of blockbuster products in 2009 with 14, which includes 5 inherited through the acquisition of Wyeth. The majority of Pfizer revenues come from the manufacture and sale of biopharmaceutical products. In 2015, Pfizer entered into a definitive agreement to acquire Hospira Inc., the world’s leading provider of injectable drugs and infusion technologies and a global leader in biosimilars, for $90 per share in cash, for a total enterprise value of approximately $17 billion.Homework For You

Save Time On Research and Writing
Hire a Pro to Write You a 100% Plagiarism-Free Paper.
Get My Paper

Revenues in 2014 were $49.6 billion, which represented a decrease of 4% compared to 2013. The Research & Development (R&D) expenses went up by $1.7 billion. The income from continuing operations in 2014 was $9.1 billion, compared to $11.4 billion in 2013.

Beta is estimated by regressing the weekly returns of Pfizer on market index DJIA returns during the 5-year period 20102014.

Beta = 0.45

Average return on market index based on 5-year period=11.68%

Save Time On Research and Writing
Hire a Pro to Write You a 100% Plagiarism-Free Paper.
Get My Paper

Risk-free rate is based on the average monthly yield of 10-year treasury bond rate during the period 20122014.

Risk-free rate = 2.18%

Risk premium = 11.68 – 2.18 = 9.5%

Cost of equity = 2.18+0.45*9.5 = 6.46%

The cost of debt is assumed as the yield to maturity on a long-term bond of Pfizer maturing in the year 2038. The yield to maturity is estimated as 5.19%.

Corporate tax rate = 35%

After-tax cost of debt = 5.19 * (1-0.35) = 3.37%

The weights used for estimation of cost of capital are the market value weights of equity and book value weight of debt.

Market value of equity in 2014 = 200,107.6 million

Book value of debt in 2014 = 36,682 million

Total value = 236,789.6 million

The growth rate estimated from both historical and fundamental is approximately 3%. Two-stage growth scenario is assumed in which the net income will grow by 3% in the first stage for 5 years and then by the growth rate of the economy in the stable stage period.

Growth rate in stable period = 2.15%

Growth rate = Reinvestment rate *ROE of pharma industry sector

ROE of pharma industry = 16.4%

Reinvestment rate = 2.15/16.4 = 13%

The reinvestment rate in the stable period is estimated as 13%.

No additional information concerning repayment of old debt and new debt issuance has been provided.

Allergan plans to acquire Pfizer Value. To help Allergan defining an offer price, assess Pfizer intrinsic value through FCFE methodology assuming a two-stage growth scenario.Get Finance homework help today

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Homework Writing Services
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Customer 463813, May 11th, 2023
Customer 463813, March 10th, 2023
Good job
Customer 456821, January 2nd, 2023
Thank you so much for the great paper!
Customer 454007, May 31st, 2020
Blends well with the target website's affairs.
Customer 452441, June 22nd, 2022
MGMT 221 Introduction to Management Information System
Thank you!
Customer 457731, February 2nd, 2022
Foundations of Language and Literacy for Diverse Prekindergarten and Kindergarten Learners
Always cite used resources.
Customer 454463, May 2nd, 2022
ASCI 491 Operational Applications in Aeronautics
Excellent. Ensure your color selections enhance group presentations.
Customer 457731, March 29th, 2022
excellent job
Customer 456821, June 20th, 2022
All instructions followed!
Customer 463337, February 28th, 2023
Leadership Studies
Writer was very patient and completed on time
Customer 452707, October 4th, 2022
Home Repair & Home Maintenance
Good job!
Customer 463337, November 21st, 2022
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat