ALKS
Alkermes plc
$52.73
Platform & Compounding FCF
80%
Two-stage FCF DCF
Mild
·
Conviction
Fair Value
Trading 5.1% below fair value
You pay
$52.73
Bear
$44.41
Fair
$55.57
Bull
$66.21
Bear
$44.41
-15.8%
5% stage 1 growth, 11% discount
Fair
$55.57
+5.4%
9% stage 1 growth, 11% discount
Bull
$66.21
+25.6%
12% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
18.6x
Market is pricing in (growth)
8.0%
vs 8.9% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $54.33 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $55.57 per share.
Warnings
Stock-based employee pay equals 41% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions