Regeneron Pharmaceuticals, Inc.REGNNASDAQ

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

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $1,702.16 per share(market-calibrated)

+119.4%

Upside to Fair Value

Current

$775.76

Pure Model

$1,858.76

Fair Value

$1,702.16

Bull Case

$2,411.24

Bear Case

$1,448.33

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: $1,858.76.

What's Driving This Ratingfor REGN

↓

CapEx normalizing toward maintenance

Historical CapEx is 5.19% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$429M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 40.44% 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 9.51% revenue growth, fading to 3.00% by Year 10. Revenue reaches $25.4B (vs $14.3B 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 76.96% indicates efficient cash generation. FCF reaches $8.5B by Year 10 (33.34% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.41

Market Risk Premium4.50%

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

Cost of Equity (Re)6.36%

Cost of Debt

Pre-tax Cost of Debt2.13%

Tax Rate13.88%

After-tax Cost of Debt1.84%

Equity Weight (E/V)96.77%

Debt Weight (D/V)3.23%

WACC Calculation

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

WACC = (96.77% × 6.36%) + (3.23% × 1.84%)

= 6.21%

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	$15.7B	$18.6B	$21.0B	$22.9B	$25.4B
EBIT	$6.4B	$7.5B	$8.5B	$9.3B	$10.3B
Tax	$881M	$1.0B	$1.2B	$1.3B	$1.4B
NOPAT	$5.5B	$6.5B	$7.3B	$8.0B	$8.8B
+ Depreciation	$454M	$540M	$609M	$664M	$734M
- Capex	$815M	$898M	$934M	$932M	$888M
- Δ NWC	$409M	$403M	$301M	$278M	$222M
Free Cash Flow	$4.7B	$5.7B	$6.7B	$7.4B	$8.5B
Discount Factor	0.942	0.835	0.740	0.656	0.547
Present Value	$4.4B	$4.8B	$5.0B	$4.9B	$4.6B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$8.5B

Terminal Growth Rate3.00%

WACC6.21%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$271.2B

PV of Terminal Value$148.4B

Exit Multiple Method

Year 10 EBITDA$11.0B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$263.8B

PV of Terminal Value$144.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$47.6B

PV of Terminal Value$148.4B

Enterprise Value$196.0B

(-) Net Debt-$412M

Equity Value$196.5B

Shares Outstanding105M

Price per Share$1,878.11

Exit Multiple Method

PV of Projected FCFs$47.6B

PV of Terminal Value$144.4B

Enterprise Value$192.0B

(-) Net Debt-$412M

Equity Value$192.4B

Shares Outstanding105M

Price per Share$1,839.40

Pure Model Fair Value

$1,858.76

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%
4.21%	$2,578.62	$2,648.68	$2,541.60	$2,439.55	$2,342.27
5.21%	$2,014.66	$2,161.48	$2,374.66	$2,439.55	$2,342.27
6.21%	$1,685.10	$1,760.24	$1,858.76	$1,993.59	$2,189.37
7.21%	$1,459.02	$1,502.98	$1,557.39	$1,626.44	$1,716.99
8.21%	$1,289.30	$1,317.30	$1,350.66	$1,391.10	$1,441.14

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

$1,448.33

86.7% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.52

Base Case

$1,858.76

139.6% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.41

Bull Case

$2,411.24

210.8% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.35

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

Growth Assumptions (Select Years)

Year 1 Revenue Growth9.51%

Year 3 Revenue Growth7.77%

Year 5 Revenue Growth5.00%

Year 7 Revenue Growth4.20%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin40.44%

Tax Rate13.88%

Historical Capex / Rev5.19%

Terminal Capex / Rev3.50%

NWC / Revenue30.00%

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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