DCF Studio

    TECH · NMS · Healthcare

    Bio-Techne Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 14.27

    Market price

    USD 72.37

    Implied upside

    -80.3%

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

    AdjustedReported capital expenditure averages 3.43% of revenue against depreciation and amortisation of 9.02%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 9.02% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Current EV/EBITDA of 30.7x 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 14.27-80.3%
    Exit multiple
    USD 39.09-46.0%
    Market price
    USD 72.37

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m124m248mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.4bn+2.2%
    EBITUSD 277.1mUSD 283.3mUSD 289.6mUSD 296.1mUSD 302.8m+2.2%
    NOPATUSD 221.4mUSD 226.4mUSD 231.5mUSD 236.7mUSD 242.0m+2.2%
    Add depreciation & amortisationUSD 112.1mUSD 114.6mUSD 117.2mUSD 119.8mUSD 122.5m+2.2%
    Less capital expenditureUSD -112.1mUSD -114.6mUSD -117.2mUSD -119.8mUSD -122.5m+2.2%
    Less increase in working capitalUSD 5.2mUSD 5.3mUSD 5.4mUSD 5.6mUSD 5.7m-2.2%
    Free cashflow to firmUSD 226.6mUSD 231.7mUSD 236.9mUSD 242.2mUSD 247.7m+2.2%
    Discount factor0.94780.85140.76480.68700.6171-
    Present valueUSD 214.8mUSD 197.3mUSD 181.2mUSD 166.4mUSD 152.8m-8.2%
    Present Value Of The ForecastUSD 912.5m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.184Reported 1.275, pulled toward 1.0 (Blume)
    Cost of equity11.51%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 11.3bn97.5% of capital
    Total debtUSD 289.1m2.5% of capital, book value as a proxy
    Tax rate20.1%Effective, capped at statutory
    WACC11.32%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 14.27

    60% of EV

    Forecast FCFF, final year
    USD 247.7m
    Capex at depreciation, working capital in reinvestment
    USD 242.0m
    Less reinvestment at g/ROIC (22.1% of NOPAT)
    USD -53.4m
    Capitalised
    USD 188.6m
    ROIC (WACC floor)
    11.3%
    Terminal value, undiscounted
    USD 2.2bn
    Terminal value, discounted
    USD 1.4bn
    Enterprise value
    USD 2.3bn
    Less net debt
    USD 24.4m
    Equity value
    USD 2.2bn

    Exit at 20.0x EBITDA

    Value per shareUSD 39.09

    85% of EV

    Terminal value, undiscounted
    USD 8.5bn
    Terminal value, discounted
    USD 5.2bn
    Enterprise value
    USD 6.2bn
    Less net debt
    USD 24.4m
    Equity value
    USD 6.1bn

    Spread between methods: 93%.

    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%
    9.32%17.1417.2017.2517.3117.36
    10.32%15.5215.5715.6115.6615.71
    11.32%14.1814.2214.2714.3114.35
    12.32%13.0613.1013.1413.1713.21
    13.32%12.1112.1412.1812.2112.24

    Outlined: this model. Green text: above today's price of 72.37. 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 year2.2%45.1%+42.8pp
    Discount rate11.3%4.0%-7.4pp
    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.