Intrinsic value of Regeneron Pharmaceuticals - REGN

Previous Close

$468.54

  Intrinsic Value

$168.23

stock screener

  Rating & Target

str. sell

-64%

  Value-price divergence*

-101%

Previous close

$468.54

 
Intrinsic value

$168.23

 
Up/down potential

-64%

 
Rating

str. sell

 
Value-price divergence*

-101%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of REGN 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 49.8

 

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, %
  18.42
  9.80
  9.32
  8.89
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
Revenue, $m
  4,860
  5,336
  5,834
  6,352
  6,892
  7,454
  8,038
  8,644
  9,275
  9,931
  10,612
  11,320
  12,056
  12,823
  13,620
  14,451
  15,316
  16,218
  17,159
  18,141
  19,165
  20,235
  21,353
  22,522
  23,744
  25,022
  26,359
  27,759
  29,225
  30,759
  32,367
Variable operating expenses, $m
 
  3,735
  4,084
  4,446
  4,824
  5,218
  5,626
  6,051
  6,493
  6,951
  7,428
  7,924
  8,440
  8,976
  9,534
  10,116
  10,721
  11,353
  12,011
  12,698
  13,416
  14,165
  14,947
  15,765
  16,621
  17,515
  18,452
  19,431
  20,457
  21,531
  22,657
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
  3,530
  3,735
  4,084
  4,446
  4,824
  5,218
  5,626
  6,051
  6,493
  6,951
  7,428
  7,924
  8,440
  8,976
  9,534
  10,116
  10,721
  11,353
  12,011
  12,698
  13,416
  14,165
  14,947
  15,765
  16,621
  17,515
  18,452
  19,431
  20,457
  21,531
  22,657
Operating income, $m
  1,331
  1,601
  1,750
  1,906
  2,068
  2,236
  2,411
  2,593
  2,783
  2,979
  3,184
  3,396
  3,617
  3,847
  4,086
  4,335
  4,595
  4,866
  5,148
  5,442
  5,750
  6,071
  6,406
  6,757
  7,123
  7,507
  7,908
  8,328
  8,767
  9,228
  9,710
EBITDA, $m
  1,436
  1,716
  1,876
  2,043
  2,216
  2,397
  2,585
  2,780
  2,983
  3,194
  3,413
  3,641
  3,877
  4,124
  4,380
  4,647
  4,926
  5,216
  5,518
  5,834
  6,164
  6,508
  6,867
  7,243
  7,636
  8,047
  8,477
  8,927
  9,399
  9,892
  10,409
Interest expense (income), $m
  5
  12
  21
  29
  38
  47
  57
  67
  78
  89
  100
  112
  124
  137
  150
  164
  178
  193
  208
  225
  242
  259
  278
  297
  317
  338
  360
  384
  408
  433
  459
Earnings before tax, $m
  1,330
  1,589
  1,730
  1,876
  2,030
  2,189
  2,354
  2,526
  2,705
  2,891
  3,084
  3,284
  3,493
  3,710
  3,936
  4,172
  4,417
  4,673
  4,939
  5,218
  5,508
  5,811
  6,128
  6,460
  6,806
  7,168
  7,547
  7,944
  8,360
  8,795
  9,251
Tax expense, $m
  434
  429
  467
  507
  548
  591
  636
  682
  730
  780
  833
  887
  943
  1,002
  1,063
  1,126
  1,193
  1,262
  1,334
  1,409
  1,487
  1,569
  1,655
  1,744
  1,838
  1,935
  2,038
  2,145
  2,257
  2,375
  2,498
Net income, $m
  896
  1,160
  1,263
  1,370
  1,482
  1,598
  1,719
  1,844
  1,975
  2,110
  2,251
  2,398
  2,550
  2,708
  2,873
  3,045
  3,224
  3,411
  3,606
  3,809
  4,021
  4,242
  4,474
  4,715
  4,968
  5,233
  5,510
  5,799
  6,103
  6,420
  6,753

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,039
  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
  6,973
  6,516
  7,123
  7,756
  8,415
  9,101
  9,814
  10,555
  11,325
  12,125
  12,957
  13,822
  14,721
  15,657
  16,630
  17,645
  18,701
  19,803
  20,951
  22,150
  23,401
  24,707
  26,073
  27,500
  28,991
  30,552
  32,185
  33,894
  35,683
  37,557
  39,520
Adjusted assets (=assets-cash), $m
  5,934
  6,516
  7,123
  7,756
  8,415
  9,101
  9,814
  10,555
  11,325
  12,125
  12,957
  13,822
  14,721
  15,657
  16,630
  17,645
  18,701
  19,803
  20,951
  22,150
  23,401
  24,707
  26,073
  27,500
  28,991
  30,552
  32,185
  33,894
  35,683
  37,557
  39,520
Revenue / Adjusted assets
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
  0.819
Average production assets, $m
  1,839
  2,017
  2,205
  2,401
  2,605
  2,817
  3,038
  3,268
  3,506
  3,754
  4,011
  4,279
  4,557
  4,847
  5,148
  5,462
  5,790
  6,131
  6,486
  6,857
  7,244
  7,649
  8,072
  8,513
  8,975
  9,458
  9,964
  10,493
  11,047
  11,627
  12,235
Working capital, $m
  1,939
  1,126
  1,231
  1,340
  1,454
  1,573
  1,696
  1,824
  1,957
  2,095
  2,239
  2,389
  2,544
  2,706
  2,874
  3,049
  3,232
  3,422
  3,621
  3,828
  4,044
  4,270
  4,506
  4,752
  5,010
  5,280
  5,562
  5,857
  6,166
  6,490
  6,829
Total debt, $m
  479
  587
  833
  1,088
  1,355
  1,632
  1,920
  2,219
  2,530
  2,854
  3,190
  3,539
  3,902
  4,280
  4,674
  5,083
  5,510
  5,955
  6,419
  6,904
  7,409
  7,937
  8,488
  9,065
  9,668
  10,298
  10,958
  11,648
  12,371
  13,128
  13,921
Total liabilities, $m
  2,524
  2,632
  2,878
  3,133
  3,400
  3,677
  3,965
  4,264
  4,575
  4,899
  5,235
  5,584
  5,947
  6,325
  6,719
  7,128
  7,555
  8,000
  8,464
  8,949
  9,454
  9,982
  10,533
  11,110
  11,713
  12,343
  13,003
  13,693
  14,416
  15,173
  15,966
Total equity, $m
  4,449
  3,883
  4,245
  4,623
  5,015
  5,424
  5,849
  6,291
  6,750
  7,227
  7,722
  8,238
  8,774
  9,331
  9,912
  10,516
  11,146
  11,802
  12,487
  13,201
  13,947
  14,726
  15,539
  16,390
  17,279
  18,209
  19,182
  20,201
  21,267
  22,384
  23,554
Total liabilities and equity, $m
  6,973
  6,515
  7,123
  7,756
  8,415
  9,101
  9,814
  10,555
  11,325
  12,126
  12,957
  13,822
  14,721
  15,656
  16,631
  17,644
  18,701
  19,802
  20,951
  22,150
  23,401
  24,708
  26,072
  27,500
  28,992
  30,552
  32,185
  33,894
  35,683
  37,557
  39,520
Debt-to-equity ratio
  0.108
  0.150
  0.200
  0.240
  0.270
  0.300
  0.330
  0.350
  0.370
  0.390
  0.410
  0.430
  0.440
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.550
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
Adjusted equity ratio
  0.575
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  896
  1,160
  1,263
  1,370
  1,482
  1,598
  1,719
  1,844
  1,975
  2,110
  2,251
  2,398
  2,550
  2,708
  2,873
  3,045
  3,224
  3,411
  3,606
  3,809
  4,021
  4,242
  4,474
  4,715
  4,968
  5,233
  5,510
  5,799
  6,103
  6,420
  6,753
Depreciation, amort., depletion, $m
  105
  115
  126
  137
  149
  161
  174
  187
  200
  215
  229
  245
  260
  277
  294
  312
  331
  350
  371
  392
  414
  437
  461
  486
  513
  540
  569
  600
  631
  664
  699
Funds from operations, $m
  1,701
  1,275
  1,389
  1,507
  1,630
  1,759
  1,892
  2,031
  2,175
  2,325
  2,480
  2,642
  2,810
  2,985
  3,168
  3,357
  3,555
  3,761
  3,976
  4,201
  4,435
  4,679
  4,935
  5,202
  5,481
  5,773
  6,079
  6,399
  6,734
  7,085
  7,452
Change in working capital, $m
  228
  100
  105
  109
  114
  119
  123
  128
  133
  138
  144
  149
  155
  162
  168
  175
  183
  190
  198
  207
  216
  226
  236
  247
  258
  270
  282
  295
  309
  324
  339
Cash from operations, $m
  1,473
  1,174
  1,284
  1,398
  1,516
  1,640
  1,769
  1,903
  2,042
  2,186
  2,337
  2,493
  2,655
  2,824
  2,999
  3,182
  3,373
  3,571
  3,778
  3,994
  4,219
  4,454
  4,699
  4,955
  5,223
  5,504
  5,797
  6,104
  6,425
  6,761
  7,113
Maintenance CAPEX, $m
  0
  -105
  -115
  -126
  -137
  -149
  -161
  -174
  -187
  -200
  -215
  -229
  -245
  -260
  -277
  -294
  -312
  -331
  -350
  -371
  -392
  -414
  -437
  -461
  -486
  -513
  -540
  -569
  -600
  -631
  -664
New CAPEX, $m
  -512
  -179
  -188
  -196
  -204
  -212
  -221
  -229
  -238
  -248
  -257
  -268
  -278
  -290
  -301
  -314
  -327
  -341
  -356
  -371
  -387
  -405
  -423
  -442
  -462
  -483
  -506
  -529
  -554
  -580
  -608
Cash from investing activities, $m
  -1,047
  -284
  -303
  -322
  -341
  -361
  -382
  -403
  -425
  -448
  -472
  -497
  -523
  -550
  -578
  -608
  -639
  -672
  -706
  -742
  -779
  -819
  -860
  -903
  -948
  -996
  -1,046
  -1,098
  -1,154
  -1,211
  -1,272
Free cash flow, $m
  426
  891
  980
  1,076
  1,175
  1,279
  1,387
  1,500
  1,617
  1,738
  1,865
  1,996
  2,132
  2,274
  2,421
  2,574
  2,733
  2,899
  3,072
  3,252
  3,439
  3,635
  3,839
  4,052
  4,275
  4,508
  4,751
  5,005
  5,271
  5,549
  5,841
Issuance/(repayment) of debt, $m
  -41
  235
  245
  256
  266
  277
  288
  299
  311
  323
  336
  349
  363
  378
  393
  410
  427
  445
  464
  484
  505
  528
  552
  576
  603
  630
  660
  690
  723
  757
  793
Issuance/(repurchase) of shares, $m
  127
  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  
  -700
  235
  245
  256
  266
  277
  288
  299
  311
  323
  336
  349
  363
  378
  393
  410
  427
  445
  464
  484
  505
  528
  552
  576
  603
  630
  660
  690
  723
  757
  793
Total cash flow (excl. dividends), $m
  -274
  1,126
  1,226
  1,331
  1,442
  1,556
  1,675
  1,799
  1,928
  2,062
  2,201
  2,345
  2,495
  2,652
  2,814
  2,984
  3,160
  3,344
  3,536
  3,736
  3,945
  4,163
  4,391
  4,629
  4,878
  5,138
  5,410
  5,696
  5,994
  6,306
  6,634
Retained Cash Flow (-), $m
  -794
  -346
  -362
  -377
  -393
  -409
  -425
  -442
  -459
  -477
  -496
  -515
  -536
  -558
  -580
  -604
  -630
  -656
  -685
  -714
  -746
  -779
  -814
  -850
  -889
  -930
  -973
  -1,019
  -1,066
  -1,117
  -1,170
Prev. year cash balance distribution, $m
 
  912
  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
 
  1,692
  864
  954
  1,049
  1,147
  1,250
  1,357
  1,469
  1,585
  1,705
  1,830
  1,959
  2,094
  2,234
  2,379
  2,531
  2,688
  2,851
  3,022
  3,199
  3,384
  3,577
  3,778
  3,989
  4,208
  4,437
  4,677
  4,928
  5,190
  5,464
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
 
  1,622
  791
  830
  863
  889
  907
  917
  918
  910
  894
  869
  836
  796
  750
  699
  643
  585
  525
  465
  407
  350
  297
  248
  203
  164
  129
  100
  76
  57
  41
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

Regeneron Pharmaceuticals, Inc., a biopharmaceutical company, discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious medical conditions worldwide. Its products include EYLEA injection for the treatment of neovascular age-related macular degeneration, diabetic macular edema, and macular edema following retinal vein occlusion; Praluent injection, an adjunct to diet and tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia or clinical atherosclerotic cardiovascular disease; and ARCALYST injection for the treatment of cryopyrin-associated periodic syndromes, including familial cold auto-inflammatory syndrome and muckle-wells syndrome in adults and children’s. It also markets Kevzara injection for the treatment of rheumatoid arthritis in adults; and ZALTRAP, an injection for intravenous infusion, which is used in combination with 5-fluorouracil, leucovorin, and irinotecan for the treatment of metastatic colorectal cancer. The company also develops EYLEA, trap-based clinical product that is in Phase III study for the treatment of neovascular glaucoma. Regeneron Pharmaceuticals, Inc. has collaboration agreement with Sanofi for the development of antibody-based clinical products comprising Praluent, Sarilumab, Dupixent, REGN2810, REGN3500, and REGN3767; Bayer HealthCare LLC for the development of Nesvacumab/aflibercept, which is used in ophthalmology; and with Teva and Mitsubishi Tanabe Pharma Corporation for developing Fasinumab, an antibody to nerve growth factor, as well as collaboration agreement with Intellia Therapeutics, Inc., to advance CRISPR/Cas gene-editing technology for in vivo therapeutic development. The company was founded in 1988 and is headquartered in Tarrytown, New York.

FINANCIAL RATIOS  of  Regeneron Pharmaceuticals (REGN)

Valuation Ratios
P/E Ratio 55.4
Price to Sales 10.2
Price to Book 11.2
Price to Tangible Book
Price to Cash Flow 33.7
Price to Free Cash Flow 51.7
Growth Rates
Sales Growth Rate 18.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.5%
Cap. Spend. - 3 Yr. Gr. Rate 26.8%
Financial Strength
Quick Ratio 8
Current Ratio 0.1
LT Debt to Equity 7.9%
Total Debt to Equity 10.8%
Interest Coverage 267
Management Effectiveness
Return On Assets 14.3%
Ret/ On Assets - 3 Yr. Avg. 12.7%
Return On Total Capital 20%
Ret/ On T. Cap. - 3 Yr. Avg. 16.8%
Return On Equity 22.1%
Return On Equity - 3 Yr. Avg. 19.2%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 93.8%
Gross Margin - 3 Yr. Avg. 92.3%
EBITDA Margin 29.6%
EBITDA Margin - 3 Yr. Avg. 30.4%
Operating Margin 27.4%
Oper. Margin - 3 Yr. Avg. 28.5%
Pre-Tax Margin 27.4%
Pre-Tax Margin - 3 Yr. Avg. 28.1%
Net Profit Margin 18.4%
Net Profit Margin - 3 Yr. Avg. 15.3%
Effective Tax Rate 32.6%
Eff/ Tax Rate - 3 Yr. Avg. 45.4%
Payout Ratio 0%

REGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the REGN stock intrinsic value calculation we used $4860 million for the last fiscal year's total revenue generated by Regeneron Pharmaceuticals. The default revenue input number comes from 2016 income statement of Regeneron Pharmaceuticals. 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 REGN stock valuation model: a) initial revenue growth rate of 9.8% 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 REGN is calculated based on our internal credit rating of Regeneron Pharmaceuticals, 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 Regeneron Pharmaceuticals.
    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 REGN stock the variable cost ratio is equal to 70%.

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 REGN 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 3.5% for Regeneron Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Regeneron Pharmaceuticals. 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 REGN 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 REGN are equal to 37.8%.

Life of production assets of 17.5 years is the average useful life of capital assets used in Regeneron Pharmaceuticals 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 REGN is equal to 21.1%. 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 - $4449 million for Regeneron Pharmaceuticals - 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 106.213 million for Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals at the current share price and the inputted number of shares is $49.8 billion.

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▶ Regeneron: The More the Merrier?   [09:51AM  Barrons.com]
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▶ Sonic, Forestar post gains; BlackBerry, Regeneron fall   [Jun-23-17 05:14PM  Associated Press]
Stock chart of REGN Financial statements of REGN
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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