Stock Analysis on Net
Stock Analysis on Net

Abiomed Inc. (NASDAQ:ABMD)

This company has been moved to the archive! The financial data has not been updated since November 3, 2022.

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Abiomed Inc., free cash flow to the firm (FCFF) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 16.68%
01 FCFF0 249,627
1 FCFF1 291,278 = 249,627 × (1 + 16.69%) 249,642
2 FCFF2 338,634 = 291,278 × (1 + 16.26%) 248,741
3 FCFF3 392,241 = 338,634 × (1 + 15.83%) 246,933
4 FCFF4 452,656 = 392,241 × (1 + 15.40%) 244,232
5 FCFF5 520,442 = 452,656 × (1 + 14.98%) 240,666
5 Terminal value (TV5) 35,124,794 = 520,442 × (1 + 14.98%) ÷ (16.68% – 14.98%) 16,242,661
Intrinsic value of Abiomed Inc. capital 17,472,875
Less: Capital lease obligation (fair value) 0
Intrinsic value of Abiomed Inc. common stock 17,472,875
 
Intrinsic value of Abiomed Inc. common stock (per share) $387.50
Current share price $373.63

Based on: 10-K (reporting date: 2022-03-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Abiomed Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 16,847,419 1.00 16.68%
Capital lease obligation (fair value) 0 0.00 0.00% = 0.00% × (1 – 22.15%)

Based on: 10-K (reporting date: 2022-03-31).

1 US$ in thousands

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 45,091,184 × $373.63
= $16,847,419,077.92

   Capital lease obligation (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (28.40% + 21.80% + 21.00% + 1.60% + 17.10% + 43.00%) ÷ 6
= 22.15%

WACC = 16.68%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Abiomed Inc., PRAT model

Microsoft Excel
Average Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Mar 31, 2017
Selected Financial Data (US$ in thousands)
Interest expense — — — — 302 354
Net income 136,505 225,525 203,009 259,016 112,170 52,116
 
Effective income tax rate (EITR)1 28.40% 21.80% 21.00% 1.60% 17.10% 43.00%
 
Interest expense, after tax2 — — — — 250 202
Interest expense (after tax) and dividends — — — — 250 202
 
EBIT(1 – EITR)3 136,505 225,525 203,009 259,016 112,420 52,318
 
Current portion of capital lease obligation — — — — — 799
Capital lease obligation, net of current portion — — — — — 15,539
Stockholders’ equity 1,503,326 1,329,675 1,065,466 936,890 689,524 452,071
Total capital 1,503,326 1,329,675 1,065,466 936,890 689,524 468,409
Financial Ratios
Retention rate (RR)4 1.00 1.00 1.00 1.00 1.00 1.00
Return on invested capital (ROIC)5 9.08% 16.96% 19.05% 27.65% 16.30% 11.17%
Averages
RR 1.00
ROIC 16.70%
 
FCFF growth rate (g)6 16.69%

Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).

1 See details »

2022 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 0 × (1 – 28.40%)
= 0

3 EBIT(1 – EITR) = Net income + Interest expense, after tax
= 136,505 + 0
= 136,505

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [136,505 – 0] ÷ 136,505
= 1.00

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 136,505 ÷ 1,503,326
= 9.08%

6 g = RR × ROIC
= 1.00 × 16.70%
= 16.69%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (16,847,419 × 16.68% – 249,627) ÷ (16,847,419 + 249,627)
= 14.98%

where:

Total capital, fair value0 = current fair value of Abiomed Inc. debt and equity (US$ in thousands)
FCFF0 = the last year Abiomed Inc. free cash flow to the firm (US$ in thousands)
WACC = weighted average cost of Abiomed Inc. capital

FCFF growth rate (g) forecast

Abiomed Inc., H-model

Microsoft Excel
Year Value gt
1 g1 16.69%
2 g2 16.26%
3 g3 15.83%
4 g4 15.40%
5 and thereafter g5 14.98%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 16.69% + (14.98% – 16.69%) × (2 – 1) ÷ (5 – 1)
= 16.26%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 16.69% + (14.98% – 16.69%) × (3 – 1) ÷ (5 – 1)
= 15.83%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 16.69% + (14.98% – 16.69%) × (4 – 1) ÷ (5 – 1)
= 15.40%