DCF Studio

    ABT · NYQ · Healthcare

    Abbott Laboratories

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 56.50

    Market price

    USD 102.61

    Implied upside

    -44.9%

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

    Value Per Share

    Perpetuity growth
    USD 56.50-44.9%
    Exit multiple
    USD 88.30-13.9%
    Market price
    USD 102.61

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 44.6bnUSD 44.8bnUSD 45.0bnUSD 45.2bnUSD 45.5bn+0.5%
    EBITUSD 7.8bnUSD 7.8bnUSD 7.8bnUSD 7.9bnUSD 7.9bn+0.5%
    NOPATUSD 6.5bnUSD 6.5bnUSD 6.6bnUSD 6.6bnUSD 6.6bn+0.5%
    Add depreciation & amortisationUSD 3.4bnUSD 3.4bnUSD 3.4bnUSD 3.4bnUSD 3.4bn+0.5%
    Less capital expenditureUSD -2.2bnUSD -2.2bnUSD -2.2bnUSD -2.2bnUSD -2.2bn+0.5%
    Less increase in working capitalUSD -76.8mUSD -77.2mUSD -77.5mUSD -77.9mUSD -78.3m+0.5%
    Free cashflow to firmUSD 7.6bnUSD 7.6bnUSD 7.7bnUSD 7.7bnUSD 7.7bn+0.5%
    Discount factor0.95950.88330.81320.74860.6892-
    Present valueUSD 7.3bnUSD 6.7bnUSD 6.2bnUSD 5.8bnUSD 5.3bn-7.5%
    Present Value Of The ForecastUSD 31.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.723Reported 0.586, pulled toward 1.0 (Blume)
    Cost of equity8.97%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 177.6bn92.8% of capital
    Total debtUSD 13.9bn7.2% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC8.62%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 56.50

    70% of EV

    Forecast FCFF, final year
    USD 7.7bn
    Capex at depreciation, working capital in reinvestment
    USD 8.3bn
    Less reinvestment at g/ROIC (24.4% of NOPAT)
    USD -2.0bn
    Capitalised
    USD 6.3bn
    ROIC (reported)
    10.2%
    Terminal value, undiscounted
    USD 105.1bn
    Terminal value, discounted
    USD 72.4bn
    Enterprise value
    USD 103.7bn
    Less net debt
    USD 4.9bn
    Equity value
    USD 98.8bn

    Exit at 16.3x EBITDA

    Value per shareUSD 88.30

    80% of EV

    Terminal value, undiscounted
    USD 185.8bn
    Terminal value, discounted
    USD 128.0bn
    Enterprise value
    USD 159.4bn
    Less net debt
    USD 4.9bn
    Equity value
    USD 154.4bn

    Spread between methods: 44%.

    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%
    6.62%76.0679.0682.7487.4093.48
    7.62%63.7665.2867.0869.2271.85
    8.62%54.9055.6556.5057.4858.61
    9.62%48.2148.5348.8749.2549.66
    10.62%43.1643.3043.4443.5843.73

    Outlined: this model. Green text: above today's price of 102.61. 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 year0.5%16.1%+15.6pp
    EBIT margin17.4%34.1%+16.6pp
    Discount rate8.6%5.8%-2.8pp
    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.