Question
The following table presents financial data from 2018 annual reports of six pharmaceuticals companies. The market value of equity for five companies is also given.
The following table presents financial data from 2018 annual reports of six pharmaceuticals companies. The market value of equity for five companies is also given. All numbers are in millions of dollars. Novartis had a book value of $1,349 million in 2017. In addition, Novartis had 4,900 million shares outstanding throughout the year.
| Company | Market value of equity | Price/Book | Sales revenue | R&D | Net Income |
| Acme | $8,096.71 | 5.6 | $1,571.0 | $307.0 | $406.0 |
| Aspen Pharma | 1,379.00 | 3.6 | 152.0 | 101.0 | 15.0 |
| Pfizer | 2,233.60 | 4.6 | 413.0 | 158.0 | 28.0 |
| Aus Pharma | 925.00 | 2.5 | 138.0 | 109.0 | 7.0 |
| Sanofi | 588.53 | 4.5 | 151.0 | 81.0 | 34.0 |
| Novartis | ? | ? | 795.4 | 314.3 | 124.4 |
Using these numbers:
- Calculate relevant multiples. [6 marks]
- Estimate a value for Novartis. [2 marks]
- What should be the value per share of Novartis? If the stock of Novartis is now traded at $1.10 (per share), should you buy this stock? [2 marks]
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The Handbook Of Financial Modeling
Authors: Jack Avon
1st Edition
1430262052, 978-1430262053
