DCF Studio

    IDXX · NMS · Healthcare

    IDEXX Laboratories, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 145.79

    Market price

    USD 511.65

    Implied upside

    -71.5%

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

    Current EV/EBITDA of 27.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 145.79-71.5%
    Exit multiple
    USD 346.85-32.2%
    Market price
    USD 511.65

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 4.7bnUSD 5.1bnUSD 5.5bnUSD 6.0bnUSD 6.5bn+8.5%
    EBITUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.7bnUSD 1.9bn+8.5%
    NOPATUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.5bn+8.5%
    Add depreciation & amortisationUSD 153.8mUSD 166.9mUSD 181.1mUSD 196.5mUSD 213.3m+8.5%
    Less capital expenditureUSD -174.4mUSD -189.3mUSD -205.4mUSD -222.9mUSD -241.9m+8.5%
    Less increase in working capitalUSD -205.4mUSD -222.9mUSD -241.9mUSD -262.6mUSD -284.9m+8.5%
    Free cashflow to firmUSD 866.3mUSD 940.1mUSD 1.0bnUSD 1.1bnUSD 1.2bn+8.5%
    Discount factor0.94370.84050.74860.66670.5938-
    Present valueUSD 817.5mUSD 790.2mUSD 763.7mUSD 738.2mUSD 713.5m-3.3%
    Present Value Of The ForecastUSD 3.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.360Reported 1.538, pulled toward 1.0 (Blume)
    Cost of equity12.48%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 40.3bn97.6% of capital
    Total debtUSD 976.1m2.4% of capital, book value as a proxy
    Tax rate20.2%Effective, capped at statutory
    WACC12.28%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 145.79

    70% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 1.5bn
    Less reinvestment at g/ROIC (6.8% of NOPAT)
    USD -103.5m
    Capitalised
    USD 1.4bn
    ROIC (reported)
    36.6%
    Terminal value, undiscounted
    USD 14.8bn
    Terminal value, discounted
    USD 8.8bn
    Enterprise value
    USD 12.6bn
    Less net debt
    USD 796.0m
    Equity value
    USD 11.8bn

    Exit at 20.0x EBITDA

    Value per shareUSD 346.85

    87% of EV

    Terminal value, undiscounted
    USD 42.2bn
    Terminal value, discounted
    USD 25.1bn
    Enterprise value
    USD 28.9bn
    Less net debt
    USD 796.0m
    Equity value
    USD 28.1bn

    Spread between methods: 82%.

    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%
    10.28%172.96179.69187.27195.86205.70
    11.28%153.46158.52164.14170.42177.48
    12.28%137.62141.51145.79150.50155.74
    13.28%124.52127.56130.88134.50138.47
    14.28%113.50115.92118.53121.36124.44

    Outlined: this model. Green text: above today's price of 511.65. 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 year8.5%46.5%+38.0pp
    EBIT margin29.3%93.1%+63.8pp
    Discount rate12.3%5.5%-6.8pp
    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.