IDEXX Laboratories, Inc.IDXXNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $390.35 per share(market-calibrated)

-38.7%

Upside to Fair Value

Current

$636.70

Pure Model

$308.23

Fair Value

$390.35

Bull Case

$416.46

Bear Case

$217.19

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

Unreachable

Calibrated Growth

75/25 blend

Market price implies assumptions beyond model range. Fair value blends 75% model / 25% market price.

What's Driving This Ratingfor IDXX

✓

CapEx already efficient

CapEx at 3.06% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 29.41% — below the sector mature average of 31.60%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.9B (29.41% margin).

→

Moderate revenue growth

Analyst consensus projects 8.76% revenue growth, fading to 3.00% by Year 10. Revenue reaches $9.9B (vs $4.3B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $205.89/share (11.7x terminal FCF) while exit multiple gives $410.58/share (33.7x 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 price exceeds model's maximum

Even with the most optimistic terminal growth the model allows, it can't reach $636.70. The market is pricing in factors beyond the DCF framework — possibly optionality, brand premium, or expectations of margin/growth inflection not yet in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 71.20% indicates efficient cash generation. FCF reaches $2.3B by Year 10 (22.95% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.66

Market Risk Premium4.50%

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

Cost of Equity (Re)11.97%

Cost of Debt

Pre-tax Cost of Debt3.36%

Tax Rate19.99%

After-tax Cost of Debt2.68%

Equity Weight (E/V)97.93%

Debt Weight (D/V)2.07%

WACC Calculation

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

WACC = (97.93% × 11.97%) + (2.07% × 2.68%)

= 11.78%

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	$4.7B	$5.6B	$7.0B	$8.5B	$9.9B
EBIT	$1.4B	$1.6B	$2.1B	$2.5B	$2.9B
Tax	$275M	$328M	$412M	$501M	$582M
NOPAT	$1.1B	$1.3B	$1.6B	$2.0B	$2.3B
+ Depreciation	$132M	$157M	$197M	$240M	$279M
- Capex	$143M	$170M	$214M	$261M	$303M
- Δ NWC	$45M	$58M	$99M	$87M	$34M
Free Cash Flow	$1.0B	$1.2B	$1.5B	$1.9B	$2.3B
Discount Factor	0.895	0.716	0.573	0.459	0.328
Present Value	$935M	$889M	$877M	$872M	$746M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.3B

Terminal Growth Rate3.00%

WACC11.78%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$26.7B

PV of Terminal Value$8.8B

Exit Multiple Method

Year 10 EBITDA$3.2B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$76.6B

PV of Terminal Value$25.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$8.6B

PV of Terminal Value$8.8B

Enterprise Value$17.4B

(-) Net Debt$897M

Equity Value$16.5B

Shares Outstanding80M

Price per Share$205.89

Exit Multiple Method

PV of Projected FCFs$8.6B

PV of Terminal Value$25.2B

Enterprise Value$33.8B

(-) Net Debt$897M

Equity Value$32.9B

Shares Outstanding80M

Price per Share$410.58

Pure Model Fair Value

$308.23

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%
9.78%	$368.89	$374.30	$380.51	$387.70	$396.15
10.78%	$332.89	$336.78	$341.16	$346.15	$351.87
11.78%	$302.17	$305.04	$308.23	$311.82	$315.86
12.78%	$275.55	$277.72	$280.11	$282.76	$285.71
13.78%	$252.23	$253.90	$255.72	$257.73	$259.93

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

$217.19

-65.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 2.07

Base Case

$308.23

-51.6% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.66

Bull Case

$416.46

-34.6% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 1.41

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

Growth Assumptions (Select Years)

Year 1 Revenue Growth8.76%

Year 3 Revenue Growth9.67%

Year 5 Revenue Growth13.56%

Year 7 Revenue Growth9.34%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin29.41%

Terminal EBIT Margin31.60%

Tax Rate19.99%

Historical Capex / Rev3.06%

NWC / Revenue11.88%

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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