DCF Studio

    ABBV · NYQ · Healthcare

    AbbVie Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 176.47

    Market price

    USD 263.96

    Implied upside

    -33.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 176.47-33.1%
    Exit multiple
    USD 234.17-11.3%
    Market price
    USD 263.96

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn11bn23bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 62.2bnUSD 63.3bnUSD 64.4bnUSD 65.6bnUSD 66.7bn+1.8%
    EBITUSD 17.3bnUSD 17.6bnUSD 17.9bnUSD 18.2bnUSD 18.6bn+1.8%
    NOPATUSD 13.7bnUSD 13.9bnUSD 14.2bnUSD 14.4bnUSD 14.7bn+1.8%
    Add depreciation & amortisationUSD 9.1bnUSD 9.3bnUSD 9.5bnUSD 9.6bnUSD 9.8bn+1.8%
    Less capital expenditureUSD -986.6mUSD -1.0bnUSD -1.0bnUSD -1.0bnUSD -1.1bn+1.8%
    Less increase in working capitalUSD -807.0mUSD -821.2mUSD -835.6mUSD -850.2mUSD -865.1m+1.8%
    Free cashflow to firmUSD 21.0bnUSD 21.4bnUSD 21.8bnUSD 22.2bnUSD 22.5bn+1.8%
    Discount factor0.96510.89900.83740.78000.7266-
    Present valueUSD 20.3bnUSD 19.2bnUSD 18.2bnUSD 17.3bnUSD 16.4bn-5.2%
    Present Value Of The ForecastUSD 91.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.518Reported 0.281, pulled toward 1.0 (Blume)
    Cost of equity7.85%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 466.4bn87.4% of capital
    Total debtUSD 67.5bn12.6% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.36%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 176.47

    76% of EV

    Forecast FCFF, final year
    USD 22.5bn
    Capex at depreciation, working capital in reinvestment
    USD 21.7bn
    Less reinvestment at g/ROIC (14.8% of NOPAT)
    USD -3.2bn
    Capitalised
    USD 18.5bn
    ROIC (reported)
    16.9%
    Terminal value, undiscounted
    USD 390.4bn
    Terminal value, discounted
    USD 283.7bn
    Enterprise value
    USD 375.1bn
    Less net debt
    USD 62.2bn
    Equity value
    USD 312.9bn

    Exit at 18.7x EBITDA

    Value per shareUSD 234.17

    81% of EV

    Terminal value, undiscounted
    USD 531.2bn
    Terminal value, discounted
    USD 386.0bn
    Enterprise value
    USD 477.4bn
    Less net debt
    USD 62.2bn
    Equity value
    USD 415.2bn

    Spread between methods: 28%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.36%251.10278.31314.95367.02447.00
    6.36%194.37209.20227.81251.87284.27
    7.36%156.98165.84176.47189.48205.80
    8.36%130.45136.06142.59150.30159.53
    9.36%110.64114.34118.55123.37128.98

    Outlined: this model. Green text: above today's price of 263.96. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year1.8%10.8%+9.0pp
    EBIT margin27.8%45.0%+17.2pp
    Discount rate7.4%5.9%-1.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.