DCF Studio

    ROP.SW · EBS · Healthcare

    Roche Holding AG

    Also onConsensus Drift

    Implied value per share

    CHF 1294.01

    Market price

    CHF 356.80

    Implied upside

    +262.7%

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

    AdjustedCapital expenditure runs at 7.9% of revenue against depreciation of 5.6%. 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.
    NoteRisk-free rate is an assumption: CHF assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CHF 1294.01+262.7%
    Exit multiple
    CHF 318.29-10.8%
    Market price
    CHF 356.80

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CHF). Outflows negative.

    0bn6bn12bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCHF
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCHF 62.6bnCHF 61.8bnCHF 61.0bnCHF 60.2bnCHF 59.5bn-1.3%
    EBITCHF 16.1bnCHF 15.9bnCHF 15.7bnCHF 15.5bnCHF 15.3bn-1.3%
    NOPATCHF 13.7bnCHF 13.5bnCHF 13.3bnCHF 13.1bnCHF 13.0bn-1.3%
    Add depreciation & amortisationCHF 3.5bnCHF 3.5bnCHF 3.4bnCHF 3.4bnCHF 3.3bn-1.3%
    Less capital expenditureCHF -5.0bnCHF -4.9bnCHF -4.8bnCHF -4.8bnCHF -4.7bn-1.3%
    Less increase in working capitalCHF -164.6mCHF -162.5mCHF -160.4mCHF -158.4mCHF -156.4m-1.3%
    Free cashflow to firmCHF 12.0bnCHF 11.9bnCHF 11.7bnCHF 11.6bnCHF 11.4bn-1.3%
    Discount factor0.98270.94890.91630.88480.8544-
    Present valueCHF 11.8bnCHF 11.3bnCHF 10.7bnCHF 10.2bnCHF 9.8bn-4.7%
    Present Value Of The ForecastCHF 53.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate0.50%CHF assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.562Reported 0.346, pulled toward 1.0 (Blume)
    Cost of equity3.59%Risk-free + beta x equity risk premium
    Cost of debt3.87%Interest expense / average total debt
    Market capitalisationCHF 284.3bn89.5% of capital
    Total debtCHF 33.2bn10.5% of capital, book value as a proxy
    Tax rate15.0%Effective, capped at statutory
    WACC3.56%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 shareCHF 1294.01

    95% of EV

    Forecast FCFF, final year
    CHF 11.4bn
    Capex at depreciation, working capital in reinvestment
    CHF 13.6bn
    Less reinvestment at g/ROIC (10.8% of NOPAT)
    CHF -1.5bn
    Capitalised
    CHF 12.1bn
    ROIC (reported)
    23.2%
    Terminal value, undiscounted
    CHF 1173.9bn
    Terminal value, discounted
    CHF 1003.0bn
    Enterprise value
    CHF 1056.8bn
    Less net debt
    CHF 17.7bn
    Equity value
    CHF 1039.1bn

    Exit at 13.8x EBITDA

    Value per shareCHF 318.29

    80% of EV

    Terminal value, undiscounted
    CHF 256.9bn
    Terminal value, discounted
    CHF 219.5bn
    Enterprise value
    CHF 273.3bn
    Less net debt
    CHF 17.7bn
    Equity value
    CHF 255.6bn

    Spread between methods: 121%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    1.56%25578.88————
    2.56%1401.062566.4023578.70——
    3.56%711.77909.591293.972365.7921691.51
    4.56%473.25547.86658.57840.111192.85
    5.56%352.31389.45438.64506.94608.28

    Outlined: this model. Green text: above today's price of 356.80. 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-1.3%-23.2%-22.0pp
    EBIT margin25.7%6.7%-19.0pp
    Discount rate3.6%6.2%+2.7pp
    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.