AstraZeneca's shares may be trading at a roughly 46% discount to intrinsic value following the failed Phase III trial of its heart drug Wainua. A Discounted Cash Flow model using the company's latest twelve-month free cash flow of about US$9.0 billion yields an estimated intrinsic value of approximately £228 per share, which is about 45.8% above the current share price. On an earnings basis, the stock trades at about 24.7 times earnings, below a tailored fair P/E ratio of around 39.0 times that reflects AstraZeneca's size, margins, and risk profile. The recent licensing move for lung cancer drug Zegfrovy supports cash flow expectations, but the Wainua setback highlights pipeline risks that may weigh on investor sentiment. Overall, the valuation picture is mixed, with the key question being whether the discount adequately compensates for clinical and execution risks.
AstraZeneca PLCDCF model suggests 46% discount to intrinsic value, but Wainua Phase III failure highlights pipeline risks, creating mixed valuation picture.