Relative Valuation of Prizer inc.

Abstract

This paper evaluates the valuation of Pfizer (PFE) through a comparative analysis with peer companies such as GSK, SAN, JNJ, ROG, and LLY, all prominent multinational pharmaceutical companies in the healthcare industry. As of December 2024, the target price for PFE is USD 41 per share. However, the current market price as of November 10, 2023, is USD 29.68 per share, indicating an undervaluation relative to its peers. This undervaluation is attributed to a decline in PFE's share price due to a decrease in COVID-19 cases. Despite the expected decrease, the extent of the share price decline suggests that, in relative terms, the current share price is undervalued. On the other hand, a Discounted Cash Flow (DCF) valuation conducted by Variya provides a more reliable assessment based on fundamental factors. The target price for PFE using the DCF approach is USD 48.9 for December 2024, aligning with the relative valuation and implying a potential increase in PFE's share price next year. The investment risk level for PFE is considered moderate, with acceptable tolerance levels for risks related to Research and Development (R&D) and foreign exchange. However, cyber risk and patent risk are deemed intolerable. In summary, based on a comprehensive evaluation of its valuation, performance, and associated risks, the recommendation for PFE is to BUY.