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A Look At The Intrinsic Value Of Biogen Inc (NASDAQ:BIIB)

How far off is Biogen Inc (NASDAQ:BIIB) from its intrinsic value? Using the most recent financial data, I am going to take a look at whether the stock is fairly priced using the discounted cash flows (DCF) model. If you want to learn more about this method, the basis for my calculations can be found in detail in the Simply Wall St analysis model. Also note that this article was written in March 2018 so be sure check the latest calculation for Biogen here.

What’s the value?

I will be using the 2-stage growth model, which takes into account the initial higher growth stage of a company’s life cycle and the steadier growth phase over the long run. To begin, I took the analyst consensus forecast of BIIB’s levered free cash flow (FCF) over the next five years and discounted these figures at the rate of 11.85%. This resulted in a present value of 5-year cash flow of US$19.99B. Want to understand how I arrived at this number? Check out our detailed analysis here.

NasdaqGS:BIIB Future Profit Mar 9th 18
NasdaqGS:BIIB Future Profit Mar 9th 18

In the visual above, we see how how BIIB’s earnings are expected to move going forward, which should give you an idea of BIIB’s outlook. Next, I calculate the terminal value, which accounts for all the future cash flows after the five years. It’s appropriate to use the 10-year government bond rate of 2.8% as the perpetual growth rate, which is rightly below GDP growth, but more towards the conservative side. The present value of the terminal value after discounting it back five years is US$39.73B.

The total value is the sum of cash flows for the next five years and the discounted terminal value, which results in the Total Equity Value, which in this case is US$59.72B. The last step is to then divide the equity value by the number of shares outstanding. This results in an intrinsic value of $282.29, which, compared to the current share price of $284.69, we find that Biogen is fair value, maybe slightly overvalued and not available at a discount at this time.

Next Steps:

Whilst important, DCF calculation shouldn’t be the only metric you look at when researching a company.

For BIIB, I’ve put together three key aspects you should further examine:

  1. Financial Health: Does BIIB have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Future Earnings: How does BIIB’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.

  3. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of BIIB? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!

PS. Simply Wall St does a DCF calculation for every US stock every 6 hours, so if you want to find the intrinsic value of any other stock just search here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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