Stock Analysis on Net
Stock Analysis on Net

IQVIA Holdings Inc. (NYSE:IQV)

This company has been moved to the archive! The financial data has not been updated since November 1, 2023.

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)

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

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 13.49%
01 FCFF0 1,839
1 FCFF1 1,888 = 1,839 × (1 + 2.69%) 1,664
2 FCFF2 1,969 = 1,888 × (1 + 4.28%) 1,529
3 FCFF3 2,085 = 1,969 × (1 + 5.88%) 1,426
4 FCFF4 2,241 = 2,085 × (1 + 7.48%) 1,351
5 FCFF5 2,444 = 2,241 × (1 + 9.07%) 1,298
5 Terminal value (TV5) 60,293 = 2,444 × (1 + 9.07%) ÷ (13.49% – 9.07%) 32,020
Intrinsic value of IQVIA Holdings Inc. capital 39,287
Less: Long-term debt and finance lease liabilities (fair value) 12,510
Intrinsic value of IQVIA Holdings Inc. common stock 26,777
 
Intrinsic value of IQVIA Holdings Inc. common stock (per share) $146.72
Current share price $180.01

Based on: 10-K (reporting date: 2022-12-31).

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)

IQVIA Holdings Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 32,852 0.72 17.28%
Long-term debt and finance lease liabilities (fair value) 12,510 0.28 3.55% = 4.48% × (1 – 20.75%)

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 182,500,000 × $180.01
= $32,851,825,000.00

   Long-term debt and finance lease liabilities (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
= (19.08% + 14.45% + 19.30% + 32.95% + 17.99%) ÷ 5
= 20.75%

WACC = 13.49%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

IQVIA Holdings Inc., PRAT model

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Average Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in millions)
Interest expense 416 375 416 447 414
Net income attributable to IQVIA Holdings Inc. 1,091 966 279 191 259
 
Effective income tax rate (EITR)1 19.08% 14.45% 19.30% 32.95% 17.99%
 
Interest expense, after tax2 337 321 336 300 340
Interest expense (after tax) and dividends 337 321 336 300 340
 
EBIT(1 – EITR)3 1,428 1,287 615 491 599
 
Current portion of long-term debt 152 91 149 100 100
Current finance lease liabilities 5 9 — — —
Long-term debt, less current portion 12,595 12,034 12,384 11,545 10,907
Long-term finance lease liabilities 224 177 122 — —
Equity attributable to IQVIA Holdings Inc.’s stockholders 5,765 6,042 6,001 6,003 6,714
Total capital 18,741 18,353 18,656 17,648 17,721
Financial Ratios
Retention rate (RR)4 0.76 0.75 0.45 0.39 0.43
Return on invested capital (ROIC)5 7.62% 7.01% 3.29% 2.78% 3.38%
Averages
RR 0.56
ROIC 4.82%
 
FCFF growth rate (g)6 2.69%

Based on: 10-K (reporting date: 2022-12-31), 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).

1 See details »

2022 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 416 × (1 – 19.08%)
= 337

3 EBIT(1 – EITR) = Net income attributable to IQVIA Holdings Inc. + Interest expense, after tax
= 1,091 + 337
= 1,428

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [1,428 – 337] ÷ 1,428
= 0.76

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 1,428 ÷ 18,741
= 7.62%

6 g = RR × ROIC
= 0.56 × 4.82%
= 2.69%

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

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (45,362 × 13.49% – 1,839) ÷ (45,362 + 1,839)
= 9.07%

where:

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

FCFF growth rate (g) forecast

IQVIA Holdings Inc., H-model

Microsoft Excel
Year Value gt
1 g1 2.69%
2 g2 4.28%
3 g3 5.88%
4 g4 7.48%
5 and thereafter g5 9.07%

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)
= 2.69% + (9.07% – 2.69%) × (2 – 1) ÷ (5 – 1)
= 4.28%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 2.69% + (9.07% – 2.69%) × (3 – 1) ÷ (5 – 1)
= 5.88%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 2.69% + (9.07% – 2.69%) × (4 – 1) ÷ (5 – 1)
= 7.48%