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 Equity (FCFE)

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Intrinsic Stock Value (Valuation Summary)

Biogen Inc., free cash flow to equity (FCFE) forecast

US$ in thousands, except per share data

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Year Value FCFEt or Terminal value (TVt) Calculation Present value at 8.50%
01 FCFE0 3,193,000
1 FCFE1 4,139,314 = 3,193,000 × (1 + 29.64%) 3,814,968
2 FCFE2 5,063,191 = 4,139,314 × (1 + 22.32%) 4,300,799
3 FCFE3 5,822,768 = 5,063,191 × (1 + 15.00%) 4,558,446
4 FCFE4 6,270,209 = 5,822,768 × (1 + 7.68%) 4,524,096
5 FCFE5 6,293,204 = 6,270,209 × (1 + 0.37%) 4,184,890
5 Terminal value (TV5) 77,641,191 = 6,293,204 × (1 + 0.37%) ÷ (8.50%0.37%) 51,630,271
Intrinsic value of Biogen Inc. common stock 73,013,469
 
Intrinsic value of Biogen Inc. common stock (per share) $507.03
Current share price $273.56

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

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.


Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.69%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk of Biogen Inc. common stock βBIIB 0.42
 
Required rate of return on Biogen Inc. common stock3 rBIIB 8.50%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rBIIB = RF + βBIIB [E(RM) – RF]
= 4.69% + 0.42 [13.79%4.69%]
= 8.50%


FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Biogen Inc., PRAT model

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Average Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in thousands)
Net income attributable to Biogen Inc. 1,556,100 4,000,600 5,888,500 4,430,700 2,539,100
Revenue 10,981,700 13,444,600 14,377,900 13,452,900 12,273,900
Total assets 23,877,300 24,618,900 27,234,300 25,288,900 23,652,600
Total Biogen Inc. shareholders’ equity 10,896,200 10,700,300 13,343,200 13,039,600 12,612,800
Financial Ratios
Retention rate1 1.00 1.00 1.00 1.00 1.00
Profit margin2 14.17% 29.76% 40.96% 32.93% 20.69%
Asset turnover3 0.46 0.55 0.53 0.53 0.52
Financial leverage4 2.19 2.30 2.04 1.94 1.88
Averages
Retention rate 1.00
Profit margin 27.70%
Asset turnover 0.52
Financial leverage 2.07
 
FCFE growth rate (g)5 29.64%

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).

2021 Calculations

1 Company does not pay dividends

2 Profit margin = 100 × Net income attributable to Biogen Inc. ÷ Revenue
= 100 × 1,556,100 ÷ 10,981,700
= 14.17%

3 Asset turnover = Revenue ÷ Total assets
= 10,981,700 ÷ 23,877,300
= 0.46

4 Financial leverage = Total assets ÷ Total Biogen Inc. shareholders’ equity
= 23,877,300 ÷ 10,896,200
= 2.19

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 1.00 × 27.70% × 0.52 × 2.07
= 29.64%


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

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (39,393,024 × 8.50%3,193,000) ÷ (39,393,024 + 3,193,000)
= 0.37%

where:
Equity market value0 = current market value of Biogen Inc. common stock (US$ in thousands)
FCFE0 = the last year Biogen Inc. free cash flow to equity (US$ in thousands)
r = required rate of return on Biogen Inc. common stock


FCFE growth rate (g) forecast

Biogen Inc., H-model

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Year Value gt
1 g1 29.64%
2 g2 22.32%
3 g3 15.00%
4 g4 7.68%
5 and thereafter g5 0.37%

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 + (g5g1) × (2 – 1) ÷ (5 – 1)
= 29.64% + (0.37%29.64%) × (2 – 1) ÷ (5 – 1)
= 22.32%

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= 29.64% + (0.37%29.64%) × (3 – 1) ÷ (5 – 1)
= 15.00%

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= 29.64% + (0.37%29.64%) × (4 – 1) ÷ (5 – 1)
= 7.68%