ELAN
Elanco Animal Health Incorporated
$22.48
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 278.9% above fair value
You pay
$22.48
Bear
$3.44
Fair
$5.93
Bull
$8.22
Bear
$3.44
-84.7%
5% stage 1 growth, 12% discount
Fair
$5.93
-73.6%
8% stage 1 growth, 12% discount
Bull
$8.22
-63.4%
10% stage 1 growth, 12% discount
Adjust Assumptions
7.6%
12.0%
3.0%
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
33%
Implied Market Multiple
36.1x
Market is pricing in (growth)
18.9%
vs 7.6% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (21 analysts)
$28.00
Divergence from AlphaVal
79%
Summary
Using a two-stage FCF DCF with 8% growth decelerating over 15 years, discounted at 12%, the base-case intrinsic value is $5.93 per share.
Warnings
Wall Street's average price target is $28.00 (from 21 analysts). Our estimate is 79% 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