Biogen Inc.BIIBNASDAQ

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $432.00 per share(market-calibrated)

+127.4%

Upside to Fair Value

Current

$189.94

Pure Model

$492.24

Fair Value

$432.00

Bull Case

$557.02

Bear Case

$448.14

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $492.24.

What's Driving This Ratingfor BIIB

✓

CapEx already efficient

CapEx at 2.70% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 25.23% 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 -3.90% revenue growth, fading to 3.00% by Year 10. Revenue reaches $10.7B (vs $9.8B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 82.75% indicates efficient cash generation. FCF reaches $2.8B by Year 10 (25.86% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.14

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)5.15%

Cost of Debt

Pre-tax Cost of Debt3.58%

Tax Rate7.71%

After-tax Cost of Debt3.30%

Equity Weight (E/V)80.04%

Debt Weight (D/V)19.96%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (80.04% × 5.15%) + (19.96% × 3.30%)

= 5.50%

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	$9.4B	$9.5B	$9.6B	$9.9B	$10.7B
EBIT	$2.4B	$2.4B	$2.4B	$2.5B	$2.7B
Tax	$184M	$184M	$187M	$192M	$208M
NOPAT	$2.2B	$2.2B	$2.2B	$2.3B	$2.5B
+ Depreciation	$568M	$570M	$578M	$595M	$643M
- Capex	$254M	$255M	$259M	$267M	$288M
- Δ NWC	-$98M	$30M	$21M	$43M	$80M
Free Cash Flow	$2.6B	$2.5B	$2.5B	$2.6B	$2.8B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$2.5B	$2.1B	$1.9B	$1.8B	$1.6B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.8B

Terminal Growth Rate3.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$113.7B

PV of Terminal Value$66.6B

Exit Multiple Method

Year 10 EBITDA$3.3B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$80.0B

PV of Terminal Value$46.9B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$19.4B

PV of Terminal Value$66.6B

Enterprise Value$86.0B

(-) Net Debt$3.9B

Equity Value$82.1B

Shares Outstanding147M

Price per Share$559.40

Exit Multiple Method

PV of Projected FCFs$19.4B

PV of Terminal Value$46.9B

Enterprise Value$66.3B

(-) Net Debt$3.9B

Equity Value$62.4B

Shares Outstanding147M

Price per Share$425.09

Pure Model Fair Value

$492.24

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%
3.50%	$624.24	$598.42	$573.80	$550.34	$527.96
4.50%	$535.12	$598.42	$573.80	$550.34	$527.96
5.50%	$425.85	$453.51	$492.24	$550.34	$527.96
6.50%	$358.37	$373.20	$392.25	$417.67	$453.24
7.50%	$310.69	$319.61	$330.51	$344.14	$361.66

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

$448.14

135.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.18

Base Case

$492.24

159.2% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.14

Bull Case

$557.02

193.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.30

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Healthcare Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-3.90%

Year 3 Revenue Growth1.23%

Year 5 Revenue Growth0.87%

Year 7 Revenue Growth1.72%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin25.23%

Tax Rate7.71%

Historical Capex / Rev2.70%

NWC / Revenue25.67%

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.

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