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Alkermes plc (ALKS) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Alkermes plc (ALKS)

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Intrinsic Value (DCF)

Current$29.15
→
Intrinsic$71.46
+145%
$49.10$71.46$113.91
Market implies 1% growth for 5 years
DCF analysis suggests ALKS could have 145% upside at 20% growth — verify assumptions match your view.
At $29, the market prices in only 1% growth — below historical 20%, suggesting low expectations.
Range: Bear $49 → Bull $114. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$87$94$102$110
10%$61$66$71$77
12%$47$51$55$59
14%$38$41$44$48

Bull Case

  • Bull case ($114) offers 291% upside at 24% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($49) with 16% growth, 12% discount rate
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5-Year Free Cash Flow Projection

Year 1$486.77M
Year 2$584.12M
Year 3$700.95M
Year 4$841.14M
Year 5$1.01B
Terminal$14.85B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$405.64MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ALKS stock undervalued or overvalued?
🟢 UNDERVALUED

ALKS trades at $29.15 vs. our DCF-derived intrinsic value of $71.46, implying +148% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of ALKS's future cash flows. The bear case ($47.31) still suggests upside, providing margin of safety.

What is ALKS's intrinsic value?

Using a 5-year DCF model: Base FCF of $406M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-216M net debt and dividing by 0.17B shares: Bear $47.31 | Base $71.46 | Bull $107.02. Current price $29.15 implies +148% to base case.

How is ALKS's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($11.88B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.