Pfizer Inc.PFENYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

⚠️Model Warnings

•Revenue projections show 15% decline from peak. Analyst estimates may reflect secular headwinds or transition period.

DCF Valuation Summary

Strong Buy

Fair Value: $42.43 per share(market-calibrated)

+55.6%

Upside to Fair Value

Current

$27.26

Pure Model

$49.05

Fair Value

$42.43

Bull Case

$53.65

Bear Case

$44.28

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $49.05.

What's Driving This Ratingfor PFE

↓

CapEx normalizing toward maintenance

Historical CapEx is 4.92% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$813M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 21.32% — below the sector mature average of 24.67%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $12.2B (21.32% margin).

→

Moderate revenue growth

Analyst consensus projects -2.24% revenue growth, fading to 3.00% by Year 10. Revenue reaches $57.3B (vs $62.6B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 71.07% indicates efficient cash generation. FCF reaches $11.7B by Year 10 (20.50% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.44

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.48%

Cost of Debt

Pre-tax Cost of Debt3.24%

Tax Rate21.00%

After-tax Cost of Debt2.56%

Equity Weight (E/V)70.51%

Debt Weight (D/V)29.49%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (70.51% × 6.48%) + (29.49% × 2.56%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$61.2B	$54.8B	$52.2B	$53.3B	$57.3B
EBIT	$13.0B	$11.7B	$11.1B	$11.4B	$12.2B
Tax	$2.7B	$2.5B	$2.3B	$2.4B	$2.6B
NOPAT	$10.3B	$9.2B	$8.8B	$9.0B	$9.6B
+ Depreciation	$4.6B	$4.1B	$3.9B	$4.0B	$4.3B
- Capex	$3.0B	$2.5B	$2.2B	$2.1B	$2.0B
- Δ NWC	-$177M	-$520M	$16M	$89M	$211M
Free Cash Flow	$12.1B	$11.3B	$10.5B	$10.8B	$11.7B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$11.4B	$9.7B	$8.0B	$7.4B	$6.9B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$11.7B

Terminal Growth Rate3.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$484.0B

PV of Terminal Value$283.3B

Exit Multiple Method

Year 10 EBITDA$16.5B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$396.7B

PV of Terminal Value$232.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$84.6B

PV of Terminal Value$283.3B

Enterprise Value$367.9B

(-) Net Debt$63.7B

Equity Value$304.3B

Shares Outstanding5.7B

Price per Share$53.54

Exit Multiple Method

PV of Projected FCFs$84.6B

PV of Terminal Value$232.2B

Enterprise Value$316.8B

(-) Net Debt$63.7B

Equity Value$253.2B

Shares Outstanding5.7B

Price per Share$44.55

Pure Model Fair Value

$49.05

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
3.50%	$63.99	$61.00	$58.15	$55.43	$52.84
4.50%	$54.05	$61.00	$58.15	$55.43	$52.84
5.50%	$41.75	$44.79	$49.05	$55.43	$52.84
6.50%	$34.08	$35.70	$37.80	$40.59	$44.50
7.50%	$28.60	$29.58	$30.78	$32.28	$34.20

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$44.28

62.5% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.55

Base Case

$49.05

79.9% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.44

Bull Case

$53.65

96.8% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.37

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Healthcare Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-2.24%

Year 3 Revenue Growth-6.97%

Year 5 Revenue Growth0.24%

Year 7 Revenue Growth1.34%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin21.32%

Terminal EBIT Margin24.67%

Tax Rate21.00%

Historical Capex / Rev4.92%

Terminal Capex / Rev3.50%

NWC / Revenue12.67%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 24x EV/EBITDA (Healthcare sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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