TGM's two-stage DCF values Baxter International Inc. (BAX) between $2.16 and $16.34 depending on assumptions, with a base case of $6.95. Growth is taken from the company's own record (5-year revenue CAGR (FCF growth too volatile to use) (floored at 2%)), fading to 2.5% long-run; the discount rate (7.5%) reflects its beta.
What would today's price require?
$22.40 is justified only if free cash flow grows about +14.6% a year (fading to 2.5% long-run) at a 7.5% required return — faster than the company has actually grown.
| Scenario | FCF growth (fading to 2.5%) | Discount | Value / share |
|---|---|---|---|
| Conservative | 0.5%/yr | 8.5% | $2.16 |
| Base case | 2.0%/yr | 7.5% | $6.95 |
| Optimistic | 5.0%/yr | 6.5% | $16.34 |
Current Price
$22.40
Market-Implied Growth
+14.6%/yr
vs -10.8% 5Y actual
Model Scenario Range
$2.16 – $16.34
model output — not a price target
Edit the assumptions to see how they change the estimated fair value. Opens seeded with TGM's data-driven base case for BAX (growth from its own 5-year record, discount from its beta), so the sandbox starts where the scenarios above leave off. Illustrative model — not investment advice.
Base inputs: FCF $567.5M · 0.52B shares · net debt $7.8B
Estimated Fair Value
$6.95
-69.0% vs $22.40
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 2.0%/yr FCF growth and 10-year horizon fixed. Green = above today's $22.40; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 5.5% | $13.42 | $16.93 | $21.61 | $28.16 | $37.97 |
| 6.5% | $7.71 | $9.82 | $12.45 | $15.84 | $20.34 |
| 7.5% | $3.90 | $5.29 | $6.95 | $8.99 | $11.53 |
| 8.5% | $1.18 | $2.15 | $3.29 | $4.63 | $6.24 |
| 9.5% | N/A | N/A | $0.67 | $1.61 | $2.71 |
