DCF Studio

    INCY · NMS · Healthcare

    Incyte Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 71.85

    Market price

    USD 125.31

    Implied upside

    -42.7%

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

    Value Per Share

    Perpetuity growth
    USD 71.85-42.7%
    Exit multiple
    USD 118.01-5.8%
    Market price
    USD 125.31

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m265m529mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 5.9bnUSD 6.8bnUSD 7.8bnUSD 8.9bnUSD 10.3bn+14.8%
    EBITUSD 939.8mUSD 1.1bnUSD 1.2bnUSD 1.4bnUSD 1.6bn+14.8%
    NOPATUSD 742.4mUSD 852.6mUSD 979.1mUSD 1.1bnUSD 1.3bn+14.8%
    Add depreciation & amortisationUSD 120.4mUSD 138.2mUSD 158.7mUSD 182.3mUSD 209.3m+14.8%
    Less capital expenditureUSD -111.7mUSD -128.3mUSD -147.4mUSD -169.2mUSD -194.4m+14.8%
    Less increase in working capitalUSD -446.9mUSD -513.2mUSD -589.3mUSD -676.8mUSD -777.2m+14.8%
    Free cashflow to firmUSD 304.2mUSD 349.3mUSD 401.1mUSD 460.7mUSD 529.0m+14.8%
    Discount factor0.95500.87100.79440.72460.6608-
    Present valueUSD 290.5mUSD 304.2mUSD 318.7mUSD 333.8mUSD 349.6m+4.7%
    Present Value Of The ForecastUSD 1.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.846Reported 0.770, pulled toward 1.0 (Blume)
    Cost of equity9.65%Risk-free + beta x equity risk premium
    Cost of debt5.78%Interest expense / average total debt
    Market capitalisationUSD 25.4bn99.8% of capital
    Total debtUSD 40.4m0.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.64%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 71.85

    85% of EV

    Forecast FCFF, final year
    USD 529.0m
    Capex at depreciation, working capital in reinvestment
    USD 1.3bn
    Less reinvestment at g/ROIC (24.2% of NOPAT)
    USD -312.3m
    Capitalised
    USD 978.9m
    ROIC (reported)
    10.3%
    Terminal value, undiscounted
    USD 14.0bn
    Terminal value, discounted
    USD 9.3bn
    Enterprise value
    USD 10.9bn
    Less net debt
    USD -3.5bn
    Equity value
    USD 14.4bn

    Exit at 15.2x EBITDA

    Value per shareUSD 118.01

    92% of EV

    Terminal value, undiscounted
    USD 28.1bn
    Terminal value, discounted
    USD 18.5bn
    Enterprise value
    USD 20.1bn
    Less net debt
    USD -3.5bn
    Equity value
    USD 23.7bn

    Spread between methods: 49%.

    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%
    7.64%91.2493.3395.7898.72102.31
    8.64%79.6180.6681.8483.1984.76
    9.64%70.9071.3671.8572.3972.98
    10.64%64.3464.5364.7264.9165.10
    11.64%59.4059.5759.7459.9160.08

    Outlined: this model. Green text: above today's price of 125.31. 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 year14.8%38.4%+23.6pp
    EBIT margin15.9%28.9%+13.0pp
    Discount rate9.6%6.3%-3.3pp
    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.