Intrinsic value of Biogen - BIIB

Previous Close

$343.63

  Intrinsic Value

$340.55

stock screener

  Rating & Target

hold

-1%

Previous close

$343.63

 
Intrinsic value

$340.55

 
Up/down potential

-1%

 
Rating

hold

We calculate the intrinsic value of BIIB stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.36
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
Revenue, $m
  11,449
  13,158
  14,076
  15,031
  16,023
  17,056
  18,130
  19,249
  20,414
  21,628
  22,893
  24,214
  25,592
  27,030
  28,533
  30,103
  31,745
  33,461
  35,257
  37,136
  39,103
  41,163
  43,320
  45,580
  47,948
  50,430
  53,031
  55,758
  58,617
  61,615
  64,760
Variable operating expenses, $m
 
  7,162
  7,603
  8,061
  8,537
  9,032
  9,547
  10,084
  10,643
  11,225
  11,832
  11,614
  12,275
  12,965
  13,686
  14,439
  15,226
  16,050
  16,911
  17,812
  18,756
  19,744
  20,779
  21,863
  22,998
  24,189
  25,436
  26,744
  28,116
  29,554
  31,062
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  6,298
  7,162
  7,603
  8,061
  8,537
  9,032
  9,547
  10,084
  10,643
  11,225
  11,832
  11,614
  12,275
  12,965
  13,686
  14,439
  15,226
  16,050
  16,911
  17,812
  18,756
  19,744
  20,779
  21,863
  22,998
  24,189
  25,436
  26,744
  28,116
  29,554
  31,062
Operating income, $m
  5,150
  5,995
  6,473
  6,970
  7,487
  8,024
  8,583
  9,165
  9,771
  10,403
  11,061
  12,600
  13,317
  14,065
  14,847
  15,664
  16,518
  17,412
  18,346
  19,324
  20,347
  21,419
  22,542
  23,718
  24,950
  26,241
  27,595
  29,014
  30,501
  32,062
  33,698
EBITDA, $m
  5,833
  8,008
  8,567
  9,148
  9,753
  10,381
  11,035
  11,716
  12,425
  13,164
  13,934
  14,738
  15,576
  16,452
  17,366
  18,322
  19,321
  20,366
  21,459
  22,603
  23,800
  25,054
  26,367
  27,742
  29,184
  30,694
  32,277
  33,937
  35,677
  37,502
  39,416
Interest expense (income), $m
  281
  320
  363
  408
  454
  503
  553
  605
  659
  716
  775
  836
  900
  967
  1,037
  1,110
  1,186
  1,266
  1,349
  1,437
  1,528
  1,623
  1,723
  1,828
  1,938
  2,053
  2,173
  2,300
  2,432
  2,571
  2,717
Earnings before tax, $m
  4,933
  5,675
  6,110
  6,562
  7,032
  7,521
  8,030
  8,560
  9,112
  9,687
  10,287
  11,763
  12,416
  13,098
  13,810
  14,554
  15,332
  16,146
  16,997
  17,887
  18,820
  19,796
  20,818
  21,890
  23,012
  24,188
  25,421
  26,714
  28,069
  29,491
  30,981
Tax expense, $m
  1,237
  1,532
  1,650
  1,772
  1,899
  2,031
  2,168
  2,311
  2,460
  2,615
  2,777
  3,176
  3,352
  3,536
  3,729
  3,930
  4,140
  4,359
  4,589
  4,830
  5,081
  5,345
  5,621
  5,910
  6,213
  6,531
  6,864
  7,213
  7,579
  7,962
  8,365
Net income, $m
  3,703
  4,143
  4,460
  4,790
  5,133
  5,490
  5,862
  6,249
  6,652
  7,071
  7,509
  8,587
  9,064
  9,561
  10,081
  10,624
  11,192
  11,786
  12,408
  13,058
  13,738
  14,451
  15,197
  15,979
  16,799
  17,657
  18,558
  19,501
  20,491
  21,528
  22,616

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,895
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  22,877
  25,015
  26,761
  28,576
  30,463
  32,426
  34,468
  36,594
  38,809
  41,117
  43,524
  46,034
  48,653
  51,388
  54,245
  57,230
  60,351
  63,614
  67,028
  70,601
  74,341
  78,257
  82,358
  86,655
  91,156
  95,874
  100,819
  106,003
  111,439
  117,139
  123,118
Adjusted assets (=assets-cash), $m
  17,982
  25,015
  26,761
  28,576
  30,463
  32,426
  34,468
  36,594
  38,809
  41,117
  43,524
  46,034
  48,653
  51,388
  54,245
  57,230
  60,351
  63,614
  67,028
  70,601
  74,341
  78,257
  82,358
  86,655
  91,156
  95,874
  100,819
  106,003
  111,439
  117,139
  123,118
Revenue / Adjusted assets
  0.637
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
  0.526
Average production assets, $m
  6,292
  11,618
  12,429
  13,272
  14,149
  15,060
  16,009
  16,997
  18,025
  19,097
  20,215
  21,381
  22,597
  23,868
  25,194
  26,581
  28,030
  29,546
  31,132
  32,791
  34,528
  36,347
  38,252
  40,247
  42,338
  44,529
  46,826
  49,234
  51,759
  54,406
  57,183
Working capital, $m
  5,312
  539
  577
  616
  657
  699
  743
  789
  837
  887
  939
  993
  1,049
  1,108
  1,170
  1,234
  1,302
  1,372
  1,446
  1,523
  1,603
  1,688
  1,776
  1,869
  1,966
  2,068
  2,174
  2,286
  2,403
  2,526
  2,655
Total debt, $m
  6,517
  6,731
  7,556
  8,415
  9,307
  10,236
  11,202
  12,208
  13,255
  14,347
  15,485
  16,672
  17,912
  19,205
  20,556
  21,968
  23,445
  24,988
  26,603
  28,293
  30,062
  31,914
  33,854
  35,886
  38,016
  40,247
  42,586
  45,038
  47,609
  50,306
  53,133
Total liabilities, $m
  10,737
  11,832
  12,658
  13,516
  14,409
  15,337
  16,303
  17,309
  18,357
  19,448
  20,587
  21,774
  23,013
  24,307
  25,658
  27,070
  28,546
  30,090
  31,704
  33,394
  35,163
  37,016
  38,955
  40,988
  43,117
  45,348
  47,687
  50,140
  52,711
  55,407
  58,235
Total equity, $m
  12,140
  13,183
  14,103
  15,059
  16,054
  17,088
  18,165
  19,285
  20,452
  21,669
  22,937
  24,260
  25,640
  27,081
  28,587
  30,160
  31,805
  33,525
  35,324
  37,207
  39,178
  41,241
  43,403
  45,667
  48,039
  50,526
  53,132
  55,864
  58,728
  61,733
  64,883
Total liabilities and equity, $m
  22,877
  25,015
  26,761
  28,575
  30,463
  32,425
  34,468
  36,594
  38,809
  41,117
  43,524
  46,034
  48,653
  51,388
  54,245
  57,230
  60,351
  63,615
  67,028
  70,601
  74,341
  78,257
  82,358
  86,655
  91,156
  95,874
  100,819
  106,004
  111,439
  117,140
  123,118
Debt-to-equity ratio
  0.537
  0.510
  0.540
  0.560
  0.580
  0.600
  0.620
  0.630
  0.650
  0.660
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.750
  0.760
  0.770
  0.770
  0.780
  0.790
  0.790
  0.800
  0.800
  0.810
  0.810
  0.810
  0.820
Adjusted equity ratio
  0.403
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,703
  4,143
  4,460
  4,790
  5,133
  5,490
  5,862
  6,249
  6,652
  7,071
  7,509
  8,587
  9,064
  9,561
  10,081
  10,624
  11,192
  11,786
  12,408
  13,058
  13,738
  14,451
  15,197
  15,979
  16,799
  17,657
  18,558
  19,501
  20,491
  21,528
  22,616
Depreciation, amort., depletion, $m
  683
  2,013
  2,094
  2,178
  2,266
  2,357
  2,452
  2,551
  2,654
  2,761
  2,873
  2,138
  2,260
  2,387
  2,519
  2,658
  2,803
  2,955
  3,113
  3,279
  3,453
  3,635
  3,825
  4,025
  4,234
  4,453
  4,683
  4,923
  5,176
  5,441
  5,718
Funds from operations, $m
  4,595
  6,156
  6,554
  6,969
  7,400
  7,848
  8,314
  8,800
  9,305
  9,832
  10,382
  10,725
  11,324
  11,948
  12,601
  13,283
  13,995
  14,741
  15,521
  16,337
  17,191
  18,086
  19,023
  20,004
  21,033
  22,110
  23,240
  24,425
  25,666
  26,969
  28,335
Change in working capital, $m
  73
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  59
  62
  64
  67
  70
  74
  77
  81
  84
  88
  93
  97
  102
  107
  112
  117
  123
  129
Cash from operations, $m
  4,522
  6,119
  6,517
  6,930
  7,359
  7,805
  8,270
  8,754
  9,258
  9,783
  10,330
  10,671
  11,267
  11,889
  12,539
  13,218
  13,928
  14,670
  15,447
  16,260
  17,111
  18,001
  18,934
  19,911
  20,935
  22,009
  23,134
  24,313
  25,549
  26,846
  28,206
Maintenance CAPEX, $m
  0
  -1,084
  -1,162
  -1,243
  -1,327
  -1,415
  -1,506
  -1,601
  -1,700
  -1,803
  -1,910
  -2,021
  -2,138
  -2,260
  -2,387
  -2,519
  -2,658
  -2,803
  -2,955
  -3,113
  -3,279
  -3,453
  -3,635
  -3,825
  -4,025
  -4,234
  -4,453
  -4,683
  -4,923
  -5,176
  -5,441
New CAPEX, $m
  -728
  -781
  -811
  -843
  -876
  -912
  -949
  -988
  -1,029
  -1,072
  -1,118
  -1,166
  -1,217
  -1,270
  -1,327
  -1,387
  -1,449
  -1,516
  -1,586
  -1,659
  -1,737
  -1,819
  -1,905
  -1,995
  -2,091
  -2,191
  -2,297
  -2,408
  -2,525
  -2,648
  -2,777
Cash from investing activities, $m
  -2,485
  -1,865
  -1,973
  -2,086
  -2,203
  -2,327
  -2,455
  -2,589
  -2,729
  -2,875
  -3,028
  -3,187
  -3,355
  -3,530
  -3,714
  -3,906
  -4,107
  -4,319
  -4,541
  -4,772
  -5,016
  -5,272
  -5,540
  -5,820
  -6,116
  -6,425
  -6,750
  -7,091
  -7,448
  -7,824
  -8,218
Free cash flow, $m
  2,037
  4,254
  4,544
  4,844
  5,155
  5,479
  5,815
  6,165
  6,529
  6,908
  7,303
  7,484
  7,912
  8,359
  8,825
  9,312
  9,821
  10,352
  10,907
  11,487
  12,094
  12,730
  13,395
  14,091
  14,820
  15,584
  16,384
  17,222
  18,101
  19,022
  19,988
Issuance/(repayment) of debt, $m
  -3
  796
  826
  858
  893
  928
  966
  1,006
  1,048
  1,092
  1,138
  1,187
  1,239
  1,294
  1,351
  1,412
  1,476
  1,544
  1,615
  1,690
  1,769
  1,852
  1,940
  2,032
  2,129
  2,232
  2,339
  2,452
  2,571
  2,696
  2,828
Issuance/(repurchase) of shares, $m
  -956
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -988
  796
  826
  858
  893
  928
  966
  1,006
  1,048
  1,092
  1,138
  1,187
  1,239
  1,294
  1,351
  1,412
  1,476
  1,544
  1,615
  1,690
  1,769
  1,852
  1,940
  2,032
  2,129
  2,232
  2,339
  2,452
  2,571
  2,696
  2,828
Total cash flow (excl. dividends), $m
  1,019
  5,050
  5,370
  5,702
  6,048
  6,407
  6,781
  7,171
  7,577
  8,000
  8,441
  8,671
  9,151
  9,653
  10,177
  10,724
  11,297
  11,895
  12,522
  13,177
  13,863
  14,582
  15,335
  16,123
  16,949
  17,815
  18,723
  19,674
  20,672
  21,719
  22,816
Retained Cash Flow (-), $m
  -2,767
  -887
  -920
  -956
  -994
  -1,034
  -1,076
  -1,121
  -1,167
  -1,216
  -1,268
  -1,323
  -1,380
  -1,441
  -1,506
  -1,573
  -1,645
  -1,720
  -1,799
  -1,883
  -1,971
  -2,064
  -2,161
  -2,264
  -2,372
  -2,486
  -2,606
  -2,732
  -2,865
  -3,004
  -3,151
Prev. year cash balance distribution, $m
 
  318
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  123
  132
  141
  150
  160
  171
  181
  192
  204
  216
  229
  242
  256
  270
  285
  301
  317
  335
  353
  371
  391
  412
  433
  456
  479
  504
  530
  558
  586
  616
Cash available for distribution, $m
 
  4,480
  4,450
  4,746
  5,053
  5,373
  5,705
  6,050
  6,410
  6,784
  7,173
  7,348
  7,771
  8,212
  8,671
  9,151
  9,652
  10,175
  10,722
  11,294
  11,892
  12,518
  13,173
  13,859
  14,577
  15,329
  16,117
  16,942
  17,808
  18,715
  19,666
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  4,296
  4,073
  4,130
  4,161
  4,165
  4,140
  4,088
  4,006
  3,897
  3,760
  3,490
  3,316
  3,122
  2,911
  2,687
  2,453
  2,214
  1,975
  1,739
  1,511
  1,295
  1,093
  908
  742
  596
  470
  364
  276
  204
  148
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Biogen Inc. is a biopharmaceutical company. The Company focuses on discovering, developing, manufacturing and delivering therapies to people living with serious neurological, rare and autoimmune diseases. The Company markets products, including TECFIDERA, AVONEX, PLEGRIDY, TYSABRI, ZINBRYTA and FAMPYRA for multiple sclerosis (MS), FUMADERM for the treatment of severe plaque psoriasis and SPINRAZA for the treatment of spinal muscular atrophy (SMA). It also has a collaboration agreement with Genentech, Inc. (Genentech), a member of the Roche Group, with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia (CLL) and other conditions, GAZYVA indicated for the treatment of CLL and follicular lymphoma, and other anti-CD20 therapies. The Company's product candidate includes OCREVUS; Biosimilar adalimumab; Aducanumab; E2609; BIIB074; BAN2401; Opicinumab; CIRARA; BIIB061; BIIB054; BIIB067, and BIIB068.

FINANCIAL RATIOS  of  Biogen (BIIB)

Valuation Ratios
P/E Ratio 20
Price to Sales 6.5
Price to Book 6.1
Price to Tangible Book
Price to Cash Flow 16.4
Price to Free Cash Flow 19.6
Growth Rates
Sales Growth Rate 6.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 13.2%
Cap. Spend. - 3 Yr. Gr. Rate -27%
Financial Strength
Quick Ratio 979
Current Ratio 0.1
LT Debt to Equity 53.6%
Total Debt to Equity 53.7%
Interest Coverage 19
Management Effectiveness
Return On Assets 18.5%
Ret/ On Assets - 3 Yr. Avg. 20.8%
Return On Total Capital 21.4%
Ret/ On T. Cap. - 3 Yr. Avg. 25.3%
Return On Equity 34.4%
Return On Equity - 3 Yr. Avg. 33.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 87.1%
Gross Margin - 3 Yr. Avg. 87.8%
EBITDA Margin 51.5%
EBITDA Margin - 3 Yr. Avg. 50%
Operating Margin 45%
Oper. Margin - 3 Yr. Avg. 43.8%
Pre-Tax Margin 43.1%
Pre-Tax Margin - 3 Yr. Avg. 42.7%
Net Profit Margin 32.3%
Net Profit Margin - 3 Yr. Avg. 31.8%
Effective Tax Rate 25.1%
Eff/ Tax Rate - 3 Yr. Avg. 24.8%
Payout Ratio 0%

BIIB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BIIB stock intrinsic value calculation we used $12274 million for the last fiscal year's total revenue generated by Biogen. The default revenue input number comes from 2016 income statement of Biogen. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BIIB stock valuation model: a) initial revenue growth rate of 7.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BIIB is calculated based on our internal credit rating of Biogen, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Biogen.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BIIB stock the variable cost ratio is equal to 54.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BIIB stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Biogen.

Corporate tax rate of 27% is the nominal tax rate for Biogen. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BIIB stock is equal to 1%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BIIB are equal to 88.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Biogen operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BIIB is equal to 4.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $12613 million for Biogen - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 213 million for Biogen is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Biogen at the current share price and the inputted number of shares is $73.2 billion.

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COMPANY NEWS

▶ Why Biogen's Stock Ripped Higher in July   [Aug-11-18 02:30PM  Motley Fool]
▶ 4 Biotech Stocks That May Fall By as Much as 13%   [Aug-10-18 02:00PM  Investopedia]
▶ Stifel: Biogen can rally to $394   [01:51PM  CNBC Videos]
▶ 5 Stocks That Should Start Paying Dividends   [Aug-06-18 09:37PM  Kiplinger]
▶ Adding Biotech ETFs to Your Portfolio   [Aug-02-18 12:55PM  Investopedia]
▶ Fired Biogen employee sues company for retaliation   [05:43AM  American City Business Journals]
▶ Collaborations Help Alkermes Flip to Profitability   [Jul-27-18 11:53AM  Motley Fool]
▶ [$$] Caution Still Needed on Biogen Alzheimers Bounty   [Jul-26-18 07:49PM  The Wall Street Journal]
▶ [$$] Caution Still Needed on Biogen Alzheimer's Bounty   [04:49PM  The Wall Street Journal]
▶ Why Biogen's Stock Is Slumping Today   [04:48PM  Motley Fool]
▶ [$$] Alzheimer's Drug Shows Benefit   [06:44PM  The Wall Street Journal]
▶ Company News For Jul 25, 2018   [10:49AM  Zacks]
▶ Biogen shares jump despite mixed news on rare disease drugs   [11:27AM  American City Business Journals]
▶ How Does Biogen Make its Money?   [10:04AM  Investopedia]
▶ Biogen Inc. to Host Earnings Call   [06:00AM  ACCESSWIRE]
▶ Biogen Q2 Earnings Preview   [03:20PM  Benzinga]
Financial statements of BIIB
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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