ELAN
Elanco Animal Health Incorporated
$25.54
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 244.1% above fair value
You pay
$25.54
Bear
$0.00
Fair
$7.42
Bull
$30.04
Bear
$0.00
-100.0%
5% stage 1 growth, 12% discount
Fair
$7.42
-70.9%
8% stage 1 growth, 12% discount
Bull
$30.04
+17.6%
10% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
33%
Implied Market Multiple
69.6x
Market is pricing in (growth)
27.8%
vs 7.6% 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 $28.40 from 21 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $7.42 per share.
Warnings
Wall Street's average price target is $28.40 (from 21 analysts). Our estimate is 98% below the consensus -- consider that gap carefully.
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