Bio-Techne CorporationTECHNASDAQ

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DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $36.63 per share(market-calibrated)

-36.0%

Upside to Fair Value

Current

$57.23

Pure Model

$35.08

Fair Value

$36.63

Bull Case

$45.03

Bear Case

$26.18

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

8.34%

Calibrated Growth

4.33%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $35.08.

What's Driving This Ratingfor TECH

↓

CapEx normalizing toward maintenance

Historical CapEx is 3.63% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$3M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 20.53% 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 0.41% revenue growth, fading to 3.00% by Year 10. Revenue reaches $2.3B (vs $1.2B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $23.71/share (13.4x terminal FCF) while exit multiple gives $46.45/share (35.6x 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 $57.23, the market implies 8.34% perpetual growth — 534bps 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 67.37% indicates efficient cash generation. FCF reaches $445M by Year 10 (19.55% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.47

Market Risk Premium4.50%

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

Cost of Equity (Re)11.11%

Cost of Debt

Pre-tax Cost of Debt2.73%

Tax Rate25.45%

After-tax Cost of Debt2.04%

Equity Weight (E/V)95.31%

Debt Weight (D/V)4.69%

WACC Calculation

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

WACC = (95.31% × 11.11%) + (4.69% × 2.04%)

= 10.68%

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	$1.2B	$1.4B	$1.7B	$2.0B	$2.3B
EBIT	$251M	$294M	$350M	$410M	$467M
Tax	$64M	$75M	$89M	$104M	$119M
NOPAT	$187M	$219M	$261M	$306M	$348M
+ Depreciation	$104M	$122M	$145M	$170M	$193M
- Capex	$44M	$52M	$61M	$71M	$80M
- Δ NWC	$1M	$33M	$41M	$35M	$17M
Free Cash Flow	$246M	$256M	$304M	$369M	$445M
Discount Factor	0.903	0.737	0.602	0.491	0.362
Present Value	$222M	$189M	$183M	$181M	$161M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$445M

Terminal Growth Rate3.00%

WACC10.68%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$6.0B

PV of Terminal Value$2.2B

Exit Multiple Method

Year 10 EBITDA$661M

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$15.9B

PV of Terminal Value$5.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$1.9B

PV of Terminal Value$2.2B

Enterprise Value$4.0B

(-) Net Debt$282M

Equity Value$3.7B

Shares Outstanding158M

Price per Share$23.71

Exit Multiple Method

PV of Projected FCFs$1.9B

PV of Terminal Value$5.7B

Enterprise Value$7.6B

(-) Net Debt$282M

Equity Value$7.3B

Shares Outstanding158M

Price per Share$46.45

Pure Model Fair Value

$35.08

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%
8.68%	$42.45	$43.25	$44.20	$45.34	$46.71
9.68%	$37.97	$38.53	$39.17	$39.91	$40.79
10.68%	$34.23	$34.63	$35.08	$35.59	$36.18
11.68%	$31.04	$31.33	$31.66	$32.02	$32.44
12.68%	$28.27	$28.49	$28.73	$29.00	$29.31

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

$26.18

-54.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.84

Base Case

$35.08

-38.7% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.47

Bull Case

$45.03

-21.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 1.25

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

Growth Assumptions (Select Years)

Year 1 Revenue Growth0.41%

Year 3 Revenue Growth9.87%

Year 5 Revenue Growth10.36%

Year 7 Revenue Growth7.42%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin20.53%

Tax Rate25.45%

Historical Capex / Rev3.63%

Terminal Capex / Rev3.50%

NWC / Revenue25.45%

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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