DCF Studio

    REGN · NMS · Healthcare

    Regeneron Pharmaceuticals, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 799.19

    Market price

    USD 784.85

    Implied upside

    +1.8%

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

    AdjustedCapital expenditure runs at 8.8% of revenue against depreciation of 3.3%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 799.19+1.8%
    Exit multiple
    USD 957.42+22.0%
    Market price
    USD 784.85

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 15.1bnUSD 16.0bnUSD 16.9bnUSD 17.8bnUSD 18.9bn+5.6%
    EBITUSD 4.7bnUSD 4.9bnUSD 5.2bnUSD 5.5bnUSD 5.8bn+5.6%
    NOPATUSD 4.3bnUSD 4.5bnUSD 4.7bnUSD 5.0bnUSD 5.3bn+5.6%
    Add depreciation & amortisationUSD 500.1mUSD 528.2mUSD 557.9mUSD 589.3mUSD 622.4m+5.6%
    Less capital expenditureUSD -1.3bnUSD -1.4bnUSD -1.5bnUSD -1.6bnUSD -1.7bn+5.6%
    Less increase in working capitalUSD -80.3mUSD -84.8mUSD -89.6mUSD -94.7mUSD -100.0m+5.6%
    Free cashflow to firmUSD 3.3bnUSD 3.5bnUSD 3.7bnUSD 3.9bnUSD 4.2bn+5.6%
    Discount factor0.96480.89810.83600.77820.7244-
    Present valueUSD 3.2bnUSD 3.2bnUSD 3.1bnUSD 3.1bnUSD 3.0bn-1.7%
    Present Value Of The ForecastUSD 15.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.459Reported 0.193, pulled toward 1.0 (Blume)
    Cost of equity7.52%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 80.8bn96.8% of capital
    Total debtUSD 2.7bn3.2% of capital, book value as a proxy
    Tax rate9.2%Effective, capped at statutory
    WACC7.43%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 799.19

    81% of EV

    Forecast FCFF, final year
    USD 4.2bn
    Capex at depreciation, working capital in reinvestment
    USD 5.4bn
    Less reinvestment at g/ROIC (20.2% of NOPAT)
    USD -1.1bn
    Capitalised
    USD 4.3bn
    ROIC (reported)
    12.4%
    Terminal value, undiscounted
    USD 90.1bn
    Terminal value, discounted
    USD 65.3bn
    Enterprise value
    USD 80.9bn
    Less net debt
    USD -5.9bn
    Equity value
    USD 86.8bn

    Exit at 17.6x EBITDA

    Value per shareUSD 957.42

    84% of EV

    Terminal value, undiscounted
    USD 113.8bn
    Terminal value, discounted
    USD 82.5bn
    Enterprise value
    USD 98.1bn
    Less net debt
    USD -5.9bn
    Equity value
    USD 104.0bn

    Spread between methods: 18%.

    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%
    5.43%1100.121188.271305.991471.551722.17
    6.43%885.27931.02988.021061.201158.86
    7.43%743.12768.71799.19836.22882.32
    8.43%642.16657.02674.14694.16717.95
    9.43%566.81575.50585.25596.30608.99

    Outlined: this model. Green text: above today's price of 784.85. 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 year5.6%5.2%-0.5pp
    EBIT margin30.9%30.3%-0.6pp
    Discount rate7.4%7.5%+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.