Question

I am using the discounted free cash flow and P/E multiple to estiamte the share price a pharmaceutical company. As expected I got different estimates, my question is: what are the weights used to estimate the weighted average price?

Answer 1

I think you should use at least 4-5 multipliers (i.e. EV/EBITDA, P/S and others) and then evaluation received by the multipliers should weigh about 0.4. In general, the weight of value is determined by the situation and weight may vary depending on the characteristics of the industry and preconditions of the Discounted free cashflow model (such as share of terminal value in whole evaluation)

Answer 2

think that when you are valuing you are going to find a range of prices, so first value with dcf but apply a sensitive analysis taking into account differences in wacc and g, then compare with multiples to accurate the value, in valuations we usually use 7-8 comparables, but is more important that the companies you use as comparables are similar in size , capital structures, business