Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Vertex Pharmaceuticals Incorporated's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 8.0% to 10.9% 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 57, DPO 96, DIO 228). At a 7.6% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $414.86 per share, suggesting VRTX is fairly valued by 9.1% at the current price of $456.61.
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 | 5,343 | 5,889 | 6,553 | 7,317 | 8,114 | 8,317 |
| (−) Net Interest | 59 | 65 | 72 | 81 | 89 | 92 |
| (+) D&A | 287 | 314 | 356 | 396 | 439 | 450 |
| EBITDA | 5,689 | 6,269 | 6,981 | 7,794 | 8,642 | 8,858 |
| (−) Tax | 2,672 | 2,945 | 3,277 | 3,659 | 4,057 | — |
| (−) CapEx | 374 | 412 | 458 | 512 | 568 | — |
| (−) ΔWC | -623 | 271 | 330 | 380 | 396 | — |
| Free Cash Flow (FCF) | 3,267 | 2,641 | 2,917 | 3,244 | 3,622 | — |
| Peers' EBITDA Multiple | 15.1x | |||||
| Terminal Value | 134,029 | |||||
| WACC / Discount Rate | 7.64% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,149 | 2,365 | 2,426 | 2,507 | 2,600 | 92,752 |
| Enterprise Value | 105,799 | |||||
| Projection Period | 13,047 | 12.3% | ||||
| Terminal Value | 92,752 | 87.7% | ||||
| (−) Current Net Debt | (1,205) | |||||
| Equity Value | 107,004 | |||||
| (÷) Outstanding Shares | 258M | |||||
| Fair Price | $415 | -9.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.1x | 13.1x | 15.1x | 17.1x | 19.1x |
|---|---|---|---|---|---|
| 5.6% | $348 | $400 | $453 | $505 | $557 |
| 6.6% | $334 | $383 | $433 | $483 | $533 |
| 7.6% | $320 | $367 | $415 | $462 | $510 |
| 8.6% | $307 | $352 | $397 | $443 | $488 |
| 9.6% | $294 | $338 | $381 | $424 | $468 |
Current price: $456.61. 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.