We use a DCF model with earnings forecasts for ten years to derive our target prices for the companies in our coverage. We assume a 2% risk-free rate,  a 6% equity-risk premium, and a terminal growth rate of zero after ten years. We forecast betas and tax rates for each company calculate a WACC based on them. For Astellas, we calculate a WACC of 6.7% based on a beta of 1.1 and a tax rate of 21%. As a result, we derive a target price of ¥2,200.

Downside share price risks include the following: 1) sales forecasts for new drugs could diverge from our expectations due to rival drugs, fiercer price competition, or competition from new entrants, and 2) disruption could emerge in the new drug development schedule. If these factors manifest themselves to a significantly different extent than we anticipate, the share price may vary from our target price.