Stock Analysis on Net
Stock Analysis on Net

Biogen Inc. (NASDAQ:BIIB)

This company has been moved to the archive! The financial data has not been updated since October 25, 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)

Biogen 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 7.57%
01 FCFF0 3,670,587
1 FCFF1 4,381,313 = 3,670,587 × (1 + 19.36%) 4,073,148
2 FCFF2 5,015,756 = 4,381,313 × (1 + 14.48%) 4,334,991
3 FCFF3 5,497,197 = 5,015,756 × (1 + 9.60%) 4,416,914
4 FCFF4 5,756,470 = 5,497,197 × (1 + 4.72%) 4,299,914
5 FCFF5 5,746,936 = 5,756,470 × (1 + -0.17%) 3,990,853
5 Terminal value (TV5) 74,209,300 = 5,746,936 × (1 + -0.17%) ÷ (7.57% – -0.17%) 51,533,275
Intrinsic value of Biogen Inc. capital 72,649,095
Less: Notes payable, including current portion (fair value) 8,004,700
Intrinsic value of Biogen Inc. common stock 64,644,395
 
Intrinsic value of Biogen Inc. common stock (per share) $448.92
Current share price $273.56

Based on: 10-K (reporting date: 2021-12-31).

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)

Biogen Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 39,393,024 0.83 8.49%
Notes payable, including current portion (fair value) 8,004,700 0.17 3.01% = 3.64% × (1 – 17.22%)

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in thousands

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 144,001,404 × $273.56
= $39,393,024,078.24

   Notes payable, including current portion (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
= (3.00% + 19.70% + 16.30% + 22.10% + 25.00%) ÷ 5
= 17.22%

WACC = 7.57%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Biogen Inc., PRAT model

Microsoft Excel
Average Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in thousands)
Interest expense 253,600 222,500 187,400 200,600 250,800
Net income attributable to Biogen Inc. 1,556,100 4,000,600 5,888,500 4,430,700 2,539,100
 
Effective income tax rate (EITR)1 3.00% 19.70% 16.30% 22.10% 25.00%
 
Interest expense, after tax2 245,992 178,668 156,854 156,267 188,100
Interest expense (after tax) and dividends 245,992 178,668 156,854 156,267 188,100
 
EBIT(1 – EITR)3 1,802,092 4,179,268 6,045,354 4,586,967 2,727,200
 
Current portion of notes payable 999,100 — 1,495,800 — 3,200
Notes payable, excluding current portion 6,274,000 7,426,200 4,459,000 5,936,500 5,935,000
Total Biogen Inc. shareholders’ equity 10,896,200 10,700,300 13,343,200 13,039,600 12,612,800
Total capital 18,169,300 18,126,500 19,298,000 18,976,100 18,551,000
Financial Ratios
Retention rate (RR)4 0.86 0.96 0.97 0.97 0.93
Return on invested capital (ROIC)5 9.92% 23.06% 31.33% 24.17% 14.70%
Averages
RR 0.94
ROIC 20.63%
 
FCFF growth rate (g)6 19.36%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 See details »

2021 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 253,600 × (1 – 3.00%)
= 245,992

3 EBIT(1 – EITR) = Net income attributable to Biogen Inc. + Interest expense, after tax
= 1,556,100 + 245,992
= 1,802,092

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [1,802,092 – 245,992] ÷ 1,802,092
= 0.86

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 1,802,092 ÷ 18,169,300
= 9.92%

6 g = RR × ROIC
= 0.94 × 20.63%
= 19.36%

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

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (47,397,724 × 7.57% – 3,670,587) ÷ (47,397,724 + 3,670,587)
= -0.17%

where:

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

FCFF growth rate (g) forecast

Biogen Inc., H-model

Microsoft Excel
Year Value gt
1 g1 19.36%
2 g2 14.48%
3 g3 9.60%
4 g4 4.72%
5 and thereafter g5 -0.17%

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)
= 19.36% + (-0.17% – 19.36%) × (2 – 1) ÷ (5 – 1)
= 14.48%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 19.36% + (-0.17% – 19.36%) × (3 – 1) ÷ (5 – 1)
= 9.60%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 19.36% + (-0.17% – 19.36%) × (4 – 1) ÷ (5 – 1)
= 4.72%