DCF Studio

    BAYN.DE · GER · Healthcare

    Bayer Aktiengesellschaft

    Also onConsensus Drift

    Implied value per share

    EUR 49.34

    Market price

    EUR 48.09

    Implied upside

    +2.6%

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

    AdjustedReported capital expenditure averages 5.75% of revenue against depreciation of 14.70%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 14.70% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: EUR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 49.34+2.6%
    Exit multiple
    EUR 60.13+25.0%
    Market price
    EUR 48.09

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn3bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 44.0bnEUR 42.4bnEUR 40.9bnEUR 39.5bnEUR 38.1bn-3.5%
    EBITEUR 5.7bnEUR 5.5bnEUR 5.3bnEUR 5.1bnEUR 4.9bn-3.5%
    NOPATEUR 5.1bnEUR 4.9bnEUR 4.7bnEUR 4.6bnEUR 4.4bn-3.5%
    Add depreciation & amortisationEUR 6.5bnEUR 6.2bnEUR 6.0bnEUR 5.8bnEUR 5.6bn-3.5%
    Less capital expenditureEUR -6.5bnEUR -6.2bnEUR -6.0bnEUR -5.8bnEUR -5.6bn-3.5%
    Less increase in working capitalEUR 132.1mEUR 127.4mEUR 122.9mEUR 118.6mEUR 114.4m+3.5%
    Free cashflow to firmEUR 5.2bnEUR 5.0bnEUR 4.9bnEUR 4.7bnEUR 4.5bn-3.5%
    Discount factor0.96780.90660.84920.79540.7450-
    Present valueEUR 5.1bnEUR 4.6bnEUR 4.1bnEUR 3.7bnEUR 3.4bn-9.6%
    Present Value Of The ForecastEUR 20.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate2.60%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.889Reported 0.834, pulled toward 1.0 (Blume)
    Cost of equity7.93%Risk-free + beta x equity risk premium
    Cost of debt5.87%Interest expense / average total debt
    Market capitalisationEUR 47.2bn56.4% of capital
    Total debtEUR 36.5bn43.6% of capital, book value as a proxy
    Tax rate10.8%Effective, capped at statutory
    WACC6.76%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 shareEUR 49.34

    73% of EV

    Forecast FCFF, final year
    EUR 4.5bn
    Capex at depreciation, working capital in reinvestment
    EUR 4.4bn
    Less reinvestment at g/ROIC (29.0% of NOPAT)
    EUR -1.3bn
    Capitalised
    EUR 3.1bn
    ROIC (reported)
    8.6%
    Terminal value, undiscounted
    EUR 75.4bn
    Terminal value, discounted
    EUR 56.2bn
    Enterprise value
    EUR 77.1bn
    Less net debt
    EUR 28.6bn
    Equity value
    EUR 48.5bn

    Exit at 8.5x EBITDA

    Value per shareEUR 60.13

    76% of EV

    Terminal value, undiscounted
    EUR 89.7bn
    Terminal value, discounted
    EUR 66.8bn
    Enterprise value
    EUR 87.7bn
    Less net debt
    EUR 28.6bn
    Equity value
    EUR 59.1bn

    Spread between methods: 20%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.76%86.8596.58110.53132.28171.14
    5.76%61.3565.3870.6077.6387.68
    6.76%45.5047.2449.3451.9555.31
    7.76%34.6835.3536.1136.9938.04
    8.76%26.9327.1027.2827.4527.63

    Outlined: this model. Green text: above today's price of 48.09. 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 year-3.5%-3.9%-0.4pp
    EBIT margin13.0%12.8%-0.2pp
    Discount rate6.8%6.8%+0.1pp
    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.