Agilent Technologies, Inc.ANYSE
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DCF Valuation
DCF Valuation Summary
Hold
Fair Value: $113.38 per share(market-calibrated)
-5.6%
Upside to Fair Value
Current
$120.05
Pure Model
$111.73
Fair Value
$113.38
Bull Case
$139.45
Bear Case
$86.50
Market Reality Check
Model Terminal Growth
3.00%
Market-Implied Growth
5.53%
Calibrated Growth
3.38%
Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $111.73.
What's Driving This Ratingfor A
↓
CapEx normalizing toward maintenance
Historical CapEx is 4.50% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$112M in annual FCF. This is the biggest driver of long-term cash flow improvement.
✓
Premium margins already priced in
EBIT margin of 22.81% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.
→
Moderate revenue growth
Analyst consensus projects 6.40% revenue growth, fading to 3.00% by Year 10. Revenue reaches $11.2B (vs $6.9B today).
↔
Perpetuity and exit methods disagree
Perpetuity growth gives $86.40/share (15.5x terminal FCF) while exit multiple gives $137.06/share (30.8x terminal FCF). The 24x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.00% growth is more conservative. The base case averages both methods.
🎯
Market pricing in higher long-term growth
To justify $120.05, the market implies 5.53% perpetual growth — 253bps above the model's 3.00%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.
✓
Strong cash flow conversion
Year 10 FCF/EBITDA conversion of 77.90% indicates efficient cash generation. FCF reaches $2.4B by Year 10 (21.03% FCF margin).
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)1.30
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)10.34%
Cost of Debt
Pre-tax Cost of Debt2.79%
Tax Rate9.20%
After-tax Cost of Debt2.53%
Equity Weight (E/V)91.01%
Debt Weight (D/V)8.99%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (91.01% × 10.34%) + (8.99% × 2.53%)
= 9.64%
10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)
| Year | Year 1 | Year 3 | Year 5 | Year 7 | Year 10 |
|---|---|---|---|---|---|
| Revenue | $7.4B | $8.3B | $9.3B | $10.1B | $11.2B |
| EBIT | $1.7B | $1.9B | $2.1B | $2.3B | $2.6B |
| Tax | $155M | $175M | $194M | $212M | $235M |
| NOPAT | $1.5B | $1.7B | $1.9B | $2.1B | $2.3B |
| + Depreciation | $309M | $349M | $387M | $423M | $468M |
| - Capex | $333M | $357M | $375M | $388M | $392M |
| - Δ NWC | $56M | $63M | $57M | $53M | $41M |
| Free Cash Flow | $1.5B | $1.7B | $1.9B | $2.1B | $2.4B |
| Discount Factor | 0.912 | 0.759 | 0.631 | 0.525 | 0.398 |
| Present Value | $1.3B | $1.3B | $1.2B | $1.1B | $937M |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$2.4B
Terminal Growth Rate3.00%
WACC9.64%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$36.5B
PV of Terminal Value$14.5B
Exit Multiple Method
Year 10 EBITDA$3.0B
Exit Multiple (EV/EBITDA)24.0x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$72.5B
PV of Terminal Value$28.9B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs$11.5B
PV of Terminal Value$14.5B
Enterprise Value$26.0B
(-) Net Debt$1.6B
Equity Value$24.5B
Shares Outstanding283M
Price per Share$86.40
Exit Multiple Method
PV of Projected FCFs$11.5B
PV of Terminal Value$28.9B
Enterprise Value$40.4B
(-) Net Debt$1.6B
Equity Value$38.8B
Shares Outstanding283M
Price per Share$137.06
Pure Model Fair Value
$111.73
Average of perpetuity growth and exit multiple methods (before market calibration)
Sensitivity AnalysisPrice per Share
| WACC ↓ / Growth → | 2.00% | 2.50% | 3.00% | 3.50% | 4.00% |
|---|---|---|---|---|---|
| 7.64% | $136.48 | $140.18 | $144.67 | $150.25 | $157.37 |
| 8.64% | $120.80 | $123.22 | $126.07 | $129.47 | $133.61 |
| 9.64% | $108.15 | $109.81 | $111.73 | $113.95 | $116.58 |
| 10.64% | $97.61 | $98.80 | $100.14 | $101.68 | $103.44 |
| 11.64% | $88.64 | $89.52 | $90.49 | $91.59 | $92.83 |
How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.
Scenario Analysis
Bear Case
$86.50
-27.9% vs current
- • -25% vs analyst consensus
- • Terminal growth: 2.5%
- • Beta: 1.62
Base Case
$111.73
-6.9% vs current
- • Analyst consensus
- • Terminal growth: 3.0%
- • Beta: 1.30
Bull Case
$139.45
16.2% vs current
- • +25% vs analyst consensus
- • Terminal growth: 3.5%
- • Beta: 1.10
Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Healthcare Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth6.40%
Year 3 Revenue Growth6.38%
Year 5 Revenue Growth5.17%
Year 7 Revenue Growth4.30%
Year 10 Revenue Growth3.00%
Terminal Growth Rate3.00%
Margin & Efficiency
Current EBIT Margin22.81%
Tax Rate9.20%
Historical Capex / Rev4.50%
Terminal Capex / Rev3.50%
NWC / Revenue12.63%
Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.
Institutional-Grade Methodology
Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta
Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 24x EV/EBITDA (Healthcare sector)
This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.