BMGT 443 Lecture Notes - Lecture 11: Bmo Capital Markets, Psoriasis, Duramax V8 Engine
24 May 2016
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Document Summary
During our valuation of lly we determined that the pharmaceutical industry is less volatile than the industry, with a raw beta of . 79. After our analysis, giving lly a terminal growth rate of 4. 5%, and ebitda of 29%, we came to a share price of . 31 signifying a hold. After performing the sanity checks we concluded that after the expiration of some patents driving down growth in 2014, lly is poised to continue its steady growth. After reviewing the multiples and implied multiples we saw that lly is trading at a premium to the industry average. Lly clearly has a positive spread, as shown by its p/b and peg above 1, but both those multiples are below the industry average signifying a less positive spread than the industry. Despite lly"s spread/margins being lower than the industry average spread they have been given a long term eps growth much higher than the industry"s.
