DCF Studio

    VTRS · NMS · Healthcare

    Viatris Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -5.31

    Market price

    USD 16.95

    Implied upside

    -131.3%

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

    AdjustedReported capital expenditure averages 3.11% of revenue against depreciation and amortisation of 18.89%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 18.89% 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.

    Value Per Share

    Perpetuity growth
    USD -5.31-131.3%
    Exit multiple
    USD 9.03-46.7%
    Market price
    USD 16.95

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m109m217mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 13.7bnUSD 13.1bnUSD 12.6bnUSD 12.0bnUSD 11.5bn-4.2%
    EBITUSD 921.6mUSD 882.9mUSD 845.8mUSD 810.3mUSD 776.3m-4.2%
    NOPATUSD 728.0mUSD 697.5mUSD 668.2mUSD 640.2mUSD 613.3m-4.2%
    Add depreciation & amortisationUSD 2.6bnUSD 2.5bnUSD 2.4bnUSD 2.3bnUSD 2.2bn-4.2%
    Less capital expenditureUSD -2.6bnUSD -2.5bnUSD -2.4bnUSD -2.3bnUSD -2.2bn-4.2%
    Less increase in working capitalUSD -510.7mUSD -489.3mUSD -468.8mUSD -449.1mUSD -430.2m-4.2%
    Free cashflow to firmUSD 217.3mUSD 208.2mUSD 199.4mUSD 191.1mUSD 183.0m-4.2%
    Discount factor0.96480.89800.83590.77800.7242-
    Present valueUSD 209.6mUSD 186.9mUSD 166.7mUSD 148.6mUSD 132.6m-10.8%
    Present Value Of The ForecastUSD 844.5m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.922Reported 0.883, pulled toward 1.0 (Blume)
    Cost of equity10.07%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 19.5bn57.0% of capital
    Total debtUSD 14.7bn43.0% of capital, book value as a proxy
    Tax rate21.0%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 -5.31

    88% of EV

    Forecast FCFF, final year
    USD 183.0m
    Capex at depreciation, working capital in reinvestment
    USD 613.3m
    Less reinvestment at g/ROIC (33.6% of NOPAT)
    USD -206.2m
    Capitalised
    USD 407.1m
    ROIC (WACC floor)
    7.4%
    Terminal value, undiscounted
    USD 8.5bn
    Terminal value, discounted
    USD 6.1bn
    Enterprise value
    USD 7.0bn
    Less net debt
    USD 13.2bn
    Equity value
    USD -6.2bn

    Exit at 10.7x EBITDA

    Value per shareUSD 9.03

    96% of EV

    Terminal value, undiscounted
    USD 31.6bn
    Terminal value, discounted
    USD 22.9bn
    Enterprise value
    USD 23.8bn
    Less net debt
    USD 13.2bn
    Equity value
    USD 10.6bn

    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%-2.80-2.76-2.72-2.69-2.65
    6.43%-4.28-4.25-4.22-4.19-4.16
    7.43%-5.36-5.34-5.31-5.29-5.26
    8.43%-6.18-6.16-6.13-6.11-6.09
    9.43%-6.81-6.80-6.78-6.76-6.74

    Outlined: this model. Green text: above today's price of 16.95. 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-4.2%16.6%+20.8pp
    EBIT margin6.7%26.3%+19.6pp
    Discount rate7.4%2.7%-4.8pp
    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.