Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Baxter International Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.0% to -1.9% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 72, DPO 55, DIO 120). At a 5.7% WACC with mid-year discounting, the terminal value (90% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 17.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $14.73 per share, suggesting BAX is fairly valued by 12.1% at the current price of $16.75.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 97 | 99 | 102 | 100 | 98 | 101 |
| (−) Net Interest | 389 | 398 | 410 | 402 | 394 | 404 |
| (+) D&A | 549 | 525 | 515 | 548 | 574 | 589 |
| EBITDA | 1,035 | 1,023 | 1,027 | 1,050 | 1,067 | 1,093 |
| (−) Tax | 16 | 16 | 17 | 16 | 16 | — |
| (−) CapEx | 572 | 586 | 602 | 591 | 579 | — |
| (−) ΔWC | 362 | 85 | 101 | -71 | -70 | — |
| Free Cash Flow (FCF) | 85 | 336 | 307 | 514 | 541 | — |
| Peers' EBITDA Multiple | 17.0x | |||||
| Terminal Value | 18,564 | |||||
| WACC / Discount Rate | 5.67% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 82 | 309 | 267 | 424 | 422 | 14,087 |
| Enterprise Value | 15,592 | |||||
| Projection Period | 1,505 | 9.7% | ||||
| Terminal Value | 14,087 | 90.3% | ||||
| (−) Current Net Debt | 8,037 | |||||
| Equity Value | 7,555 | |||||
| (÷) Outstanding Shares | 513M | |||||
| Fair Price | $15 | -12.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 13.0x | 15.0x | 17.0x | 19.0x | 21.0x |
|---|---|---|---|---|---|
| 3.7% | $11 | $14 | $18 | $21 | $25 |
| 4.7% | $9 | $13 | $16 | $20 | $23 |
| 5.7% | $8 | $11 | $15 | $18 | $21 |
| 6.7% | $7 | $10 | $13 | $16 | $20 |
| 7.7% | $6 | $9 | $12 | $15 | $18 |
Current price: $16.75. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.