Intrinsic value of Biogen - BIIB

Previous Close

$313.97

  Intrinsic Value

$341.26

stock screener

  Rating & Target

hold

+9%

Previous close

$313.97

 
Intrinsic value

$341.26

 
Up/down potential

+9%

 
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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 66.4

 

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
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
Revenue, $m
  11,449
  12,182
  12,944
  13,738
  14,565
  15,428
  16,326
  17,264
  18,243
  19,265
  20,333
  21,449
  22,615
  23,836
  25,112
  26,448
  27,847
  29,312
  30,846
  32,453
  34,137
  35,902
  37,752
  39,691
  41,725
  43,858
  46,095
  48,441
  50,903
  53,485
  56,195
Variable operating expenses, $m
 
  6,628
  7,020
  7,428
  7,853
  8,296
  8,758
  9,240
  9,743
  10,268
  10,817
  11,024
  11,623
  12,250
  12,907
  13,593
  14,312
  15,065
  15,853
  16,679
  17,545
  18,452
  19,403
  20,399
  21,445
  22,541
  23,691
  24,897
  26,162
  27,489
  28,882
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
  6,628
  7,020
  7,428
  7,853
  8,296
  8,758
  9,240
  9,743
  10,268
  10,817
  11,024
  11,623
  12,250
  12,907
  13,593
  14,312
  15,065
  15,853
  16,679
  17,545
  18,452
  19,403
  20,399
  21,445
  22,541
  23,691
  24,897
  26,162
  27,489
  28,882
Operating income, $m
  5,150
  5,554
  5,925
  6,311
  6,713
  7,132
  7,568
  8,024
  8,500
  8,997
  9,516
  10,425
  10,992
  11,585
  12,206
  12,855
  13,535
  14,247
  14,992
  15,773
  16,592
  17,450
  18,349
  19,292
  20,280
  21,317
  22,404
  23,545
  24,741
  25,996
  27,313
EBITDA, $m
  5,833
  6,406
  6,807
  7,225
  7,660
  8,113
  8,586
  9,079
  9,594
  10,132
  10,693
  11,280
  11,893
  12,535
  13,207
  13,909
  14,645
  15,415
  16,222
  17,067
  17,953
  18,881
  19,854
  20,874
  21,943
  23,065
  24,241
  25,475
  26,770
  28,128
  29,553
Interest expense (income), $m
  281
  280
  309
  340
  372
  406
  440
  476
  514
  554
  595
  638
  683
  730
  779
  831
  884
  941
  1,000
  1,062
  1,126
  1,194
  1,265
  1,340
  1,418
  1,500
  1,586
  1,676
  1,771
  1,870
  1,974
Earnings before tax, $m
  4,933
  5,274
  5,615
  5,970
  6,340
  6,726
  7,128
  7,548
  7,986
  8,443
  8,921
  9,787
  10,309
  10,855
  11,427
  12,025
  12,650
  13,306
  13,993
  14,712
  15,466
  16,256
  17,084
  17,952
  18,862
  19,817
  20,818
  21,869
  22,970
  24,126
  25,339
Tax expense, $m
  1,237
  1,424
  1,516
  1,612
  1,712
  1,816
  1,925
  2,038
  2,156
  2,280
  2,409
  2,643
  2,783
  2,931
  3,085
  3,247
  3,416
  3,593
  3,778
  3,972
  4,176
  4,389
  4,613
  4,847
  5,093
  5,351
  5,621
  5,905
  6,202
  6,514
  6,842
Net income, $m
  3,703
  3,850
  4,099
  4,358
  4,628
  4,910
  5,204
  5,510
  5,830
  6,163
  6,512
  7,145
  7,526
  7,924
  8,341
  8,778
  9,235
  9,713
  10,215
  10,740
  11,290
  11,867
  12,471
  13,105
  13,769
  14,466
  15,197
  15,964
  16,768
  17,612
  18,498

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
  19,124
  20,321
  21,567
  22,866
  24,219
  25,630
  27,102
  28,639
  30,244
  31,920
  33,672
  35,503
  37,419
  39,423
  41,520
  43,716
  46,015
  48,423
  50,946
  53,590
  56,360
  59,265
  62,310
  65,502
  68,851
  72,362
  76,046
  79,910
  83,964
  88,218
Adjusted assets (=assets-cash), $m
  17,982
  19,124
  20,321
  21,567
  22,866
  24,219
  25,630
  27,102
  28,639
  30,244
  31,920
  33,672
  35,503
  37,419
  39,423
  41,520
  43,716
  46,015
  48,423
  50,946
  53,590
  56,360
  59,265
  62,310
  65,502
  68,851
  72,362
  76,046
  79,910
  83,964
  88,218
Revenue / Adjusted assets
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
Average production assets, $m
  6,292
  6,700
  7,119
  7,556
  8,011
  8,485
  8,980
  9,495
  10,034
  10,596
  11,183
  11,797
  12,438
  13,110
  13,812
  14,547
  15,316
  16,121
  16,965
  17,849
  18,775
  19,746
  20,763
  21,830
  22,949
  24,122
  25,352
  26,643
  27,997
  29,417
  30,907
Working capital, $m
  5,312
  451
  479
  508
  539
  571
  604
  639
  675
  713
  752
  794
  837
  882
  929
  979
  1,030
  1,085
  1,141
  1,201
  1,263
  1,328
  1,397
  1,469
  1,544
  1,623
  1,706
  1,792
  1,883
  1,979
  2,079
Total debt, $m
  6,517
  7,197
  7,911
  8,656
  9,431
  10,239
  11,081
  11,960
  12,877
  13,835
  14,836
  15,882
  16,975
  18,119
  19,315
  20,567
  21,878
  23,251
  24,689
  26,195
  27,773
  29,427
  31,161
  32,979
  34,885
  36,884
  38,980
  41,179
  43,486
  45,907
  48,446
Total liabilities, $m
  10,737
  11,417
  12,131
  12,876
  13,651
  14,459
  15,301
  16,180
  17,097
  18,055
  19,056
  20,102
  21,195
  22,339
  23,535
  24,787
  26,098
  27,471
  28,909
  30,415
  31,993
  33,647
  35,381
  37,199
  39,105
  41,104
  43,200
  45,399
  47,706
  50,127
  52,666
Total equity, $m
  12,140
  7,707
  8,189
  8,692
  9,215
  9,760
  10,329
  10,922
  11,542
  12,188
  12,864
  13,570
  14,308
  15,080
  15,887
  16,733
  17,617
  18,544
  19,515
  20,531
  21,597
  22,713
  23,884
  25,111
  26,397
  27,747
  29,162
  30,647
  32,204
  33,838
  35,552
Total liabilities and equity, $m
  22,877
  19,124
  20,320
  21,568
  22,866
  24,219
  25,630
  27,102
  28,639
  30,243
  31,920
  33,672
  35,503
  37,419
  39,422
  41,520
  43,715
  46,015
  48,424
  50,946
  53,590
  56,360
  59,265
  62,310
  65,502
  68,851
  72,362
  76,046
  79,910
  83,965
  88,218
Debt-to-equity ratio
  0.537
  0.930
  0.970
  1.000
  1.020
  1.050
  1.070
  1.100
  1.120
  1.140
  1.150
  1.170
  1.190
  1.200
  1.220
  1.230
  1.240
  1.250
  1.270
  1.280
  1.290
  1.300
  1.300
  1.310
  1.320
  1.330
  1.340
  1.340
  1.350
  1.360
  1.360
Adjusted equity ratio
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,703
  3,850
  4,099
  4,358
  4,628
  4,910
  5,204
  5,510
  5,830
  6,163
  6,512
  7,145
  7,526
  7,924
  8,341
  8,778
  9,235
  9,713
  10,215
  10,740
  11,290
  11,867
  12,471
  13,105
  13,769
  14,466
  15,197
  15,964
  16,768
  17,612
  18,498
Depreciation, amort., depletion, $m
  683
  852
  883
  914
  947
  982
  1,018
  1,055
  1,094
  1,135
  1,177
  855
  901
  950
  1,001
  1,054
  1,110
  1,168
  1,229
  1,293
  1,361
  1,431
  1,505
  1,582
  1,663
  1,748
  1,837
  1,931
  2,029
  2,132
  2,240
Funds from operations, $m
  4,595
  4,702
  4,982
  5,273
  5,576
  5,892
  6,221
  6,565
  6,924
  7,298
  7,690
  7,999
  8,427
  8,874
  9,342
  9,832
  10,345
  10,882
  11,444
  12,033
  12,650
  13,297
  13,976
  14,687
  15,432
  16,214
  17,034
  17,895
  18,797
  19,744
  20,737
Change in working capital, $m
  73
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  96
  100
Cash from operations, $m
  4,522
  4,675
  4,954
  5,243
  5,545
  5,860
  6,188
  6,530
  6,887
  7,260
  7,650
  7,958
  8,384
  8,829
  9,295
  9,783
  10,293
  10,827
  11,387
  11,974
  12,588
  13,232
  13,907
  14,615
  15,357
  16,135
  16,952
  17,808
  18,706
  19,648
  20,637
Maintenance CAPEX, $m
  0
  -456
  -486
  -516
  -548
  -581
  -615
  -651
  -688
  -727
  -768
  -810
  -855
  -901
  -950
  -1,001
  -1,054
  -1,110
  -1,168
  -1,229
  -1,293
  -1,361
  -1,431
  -1,505
  -1,582
  -1,663
  -1,748
  -1,837
  -1,931
  -2,029
  -2,132
New CAPEX, $m
  -728
  -408
  -419
  -437
  -455
  -474
  -494
  -516
  -538
  -562
  -587
  -614
  -642
  -671
  -702
  -735
  -769
  -806
  -844
  -884
  -926
  -971
  -1,018
  -1,067
  -1,119
  -1,173
  -1,230
  -1,291
  -1,354
  -1,420
  -1,490
Cash from investing activities, $m
  -2,485
  -864
  -905
  -953
  -1,003
  -1,055
  -1,109
  -1,167
  -1,226
  -1,289
  -1,355
  -1,424
  -1,497
  -1,572
  -1,652
  -1,736
  -1,823
  -1,916
  -2,012
  -2,113
  -2,219
  -2,332
  -2,449
  -2,572
  -2,701
  -2,836
  -2,978
  -3,128
  -3,285
  -3,449
  -3,622
Free cash flow, $m
  2,037
  3,811
  4,049
  4,291
  4,543
  4,805
  5,079
  5,364
  5,661
  5,971
  6,295
  6,534
  6,887
  7,257
  7,643
  8,047
  8,470
  8,912
  9,375
  9,860
  10,368
  10,901
  11,459
  12,044
  12,657
  13,299
  13,973
  14,680
  15,422
  16,199
  17,015
Issuance/(repayment) of debt, $m
  -3
  685
  715
  744
  775
  808
  842
  879
  917
  958
  1,001
  1,046
  1,093
  1,144
  1,196
  1,252
  1,311
  1,373
  1,438
  1,506
  1,578
  1,654
  1,734
  1,818
  1,906
  1,999
  2,097
  2,199
  2,307
  2,420
  2,539
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
  685
  715
  744
  775
  808
  842
  879
  917
  958
  1,001
  1,046
  1,093
  1,144
  1,196
  1,252
  1,311
  1,373
  1,438
  1,506
  1,578
  1,654
  1,734
  1,818
  1,906
  1,999
  2,097
  2,199
  2,307
  2,420
  2,539
Total cash flow (excl. dividends), $m
  1,019
  4,496
  4,763
  5,035
  5,318
  5,613
  5,921
  6,243
  6,578
  6,929
  7,296
  7,580
  7,981
  8,400
  8,839
  9,299
  9,780
  10,285
  10,813
  11,367
  11,947
  12,555
  13,193
  13,861
  14,563
  15,298
  16,070
  16,879
  17,729
  18,620
  19,555
Retained Cash Flow (-), $m
  -2,767
  -457
  -482
  -502
  -523
  -545
  -569
  -593
  -619
  -647
  -676
  -706
  -738
  -772
  -808
  -845
  -885
  -927
  -970
  -1,017
  -1,065
  -1,117
  -1,170
  -1,227
  -1,287
  -1,349
  -1,415
  -1,484
  -1,557
  -1,634
  -1,714
Prev. year cash balance distribution, $m
 
  4,890
  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
 
  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 available for distribution, $m
 
  8,929
  4,281
  4,533
  4,795
  5,068
  5,352
  5,649
  5,959
  6,282
  6,620
  6,874
  7,243
  7,628
  8,032
  8,454
  8,896
  9,358
  9,842
  10,350
  10,881
  11,438
  12,022
  12,634
  13,276
  13,949
  14,655
  15,395
  16,171
  16,986
  17,840
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
 
  8,561
  3,919
  3,945
  3,948
  3,928
  3,884
  3,817
  3,725
  3,609
  3,471
  3,264
  3,091
  2,900
  2,696
  2,482
  2,261
  2,036
  1,813
  1,594
  1,383
  1,183
  998
  828
  676
  543
  428
  330
  250
  185
  134
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 18.3
Price to Sales 5.9
Price to Book 5.6
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow 17.9
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 $11449 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 6.4% 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 54.6%.

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 4.3% 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 0%.

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 55%.

Life of production assets of 13.8 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 3.7%. 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 - $12140 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 211.446 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 $66.4 billion.

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COMPANY NEWS

▶ Better Buy: Biogen Inc. vs. Gilead Sciences   [Nov-18-17 09:37AM  Motley Fool]
▶ Why Its Time to Put Pfizer Inc. Stock on Your Watchlist   [Nov-17-17 10:12AM  InvestorPlace]
▶ Ionis Pharmaceuticals Inc. Sets Itself Up for Growth   [Nov-14-17 03:44PM  Motley Fool]
▶ Why Biotech Stocks Are Nearing a Rebound   [02:08PM  Investopedia]
▶ Which Will Pfizer Buy? Biogen or Bristol-Myers Squibb   [Nov-13-17 10:08AM  Barrons.com]
▶ Better Buy: Acadia Pharmaceuticals vs. Biogen   [Nov-11-17 07:21AM  Motley Fool]
▶ Biogen Shows Rising Relative Strength; Still Shy Of Key Threshold   [Nov-06-17 03:00AM  Investor's Business Daily]
▶ Biogen Sees IBD RS Rating Climb To 73   [03:00AM  Investor's Business Daily]
▶ Biotech Stocks Are Suddenly a Bargain   [08:00AM  Investopedia]
▶ Ionis Down Big on Analyst Miss   [02:29PM  Motley Fool]
▶ Biogen Sees Relative Strength Rating Climb To 75   [03:00AM  Investor's Business Daily]
▶ 3 ETFs to Watch on Biotech Earnings   [Oct-29-17 03:04PM  Zacks]
▶ Biogens Biosimilars and Interferons in 3Q17   [07:37AM  Market Realist]
▶ How 3Q17 Shaped up for Tysabri, Fampyra, and Zinbryta   [Oct-26-17 05:55PM  Market Realist]
▶ A Look at Biogens Tecfidera in 3Q17   [04:36PM  Market Realist]
▶ How Biogen Performed in 3Q17   [02:50PM  Market Realist]
▶ Biogen: Let's Start All Over Again   [12:24PM  Barrons.com]
▶ What's Biogen's Big Risk?   [08:01AM  Motley Fool]
▶ Biogen Dives Despite Topping Views; Lilly, Novartis Beat   [05:01PM  Investor's Business Daily]
▶ Alexion: How Do You Spell Relief?   [01:00PM  Barrons.com]
▶ Biogen reworks Alzheimer's drug pacts in bullish move   [09:20AM  American City Business Journals]
▶ Biogen Has an MS Meltdown Coming   [09:01AM  Bloomberg]
▶ Biogen Inc. to Host Earnings Call   [06:50AM  ACCESSWIRE]
▶ How Earnings Will Fuel Biotech's Bull Run: BMO Capital   [Oct-23-17 02:30PM  Investopedia]
▶ Biogen Stock: Performance in 3Q17   [Oct-20-17 06:06PM  Market Realist]
▶ Biogen Could Rise 20% on Healthy Outlook   [06:00AM  Investopedia]
▶ Where to Find Value in Healthcare Stocks   [Oct-17-17 07:33PM  Zacks]
▶ Two positive calls on this biotech name   [01:37PM  CNBC Videos]
▶ [$$] More Biotechs That Can Beat Q3 Views   [Oct-16-17 12:01PM  Barrons.com]
▶ Celgene, Biogen Are Poised to Break Out: A Technical View   [Oct-12-17 06:00AM  Investopedia]
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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