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Bausch Health Companies Inc. (BHC) Intrinsic Value

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

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Bausch Health Companies Inc. (BHC)

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Intrinsic Value (DCF)

Current$7.26
→
Intrinsic$64.95
+795%
$26.33$64.95$138.22
Market implies 8% growth for 5 years
DCF analysis suggests BHC could have 795% upside at 25% growth — verify assumptions match your view.
At $7, the market prices in 8% annual cash flow growth — a moderate expectation aligned with historical trends (25%).
Range: Bear $26 → Bull $138. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$93$105$118$131
10%$48$56$65$74
12%$23$29$36$43
14%$8$12$18$23

Bull Case

  • Bull case ($138) offers 1804% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (8%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($26) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$1.57B
Year 2$1.97B
Year 3$2.46B
Year 4$3.08B
Year 5$3.85B
Terminal$56.58B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.26BTTM 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 BHC stock undervalued or overvalued?
🟢 UNDERVALUED

BHC trades at $7.26 vs. our DCF-derived intrinsic value of $44.19, implying +300% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of BHC's future cash flows. The bear case ($9.70) still suggests upside, providing margin of safety.

What is BHC's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.26B, projected at 25.0% 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 $20.63B net debt and dividing by 0.37B shares: Bear $9.70 | Base $44.19 | Bull $94.98. Current price $7.26 implies +300% to base case.

How is BHC's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% 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 ($36.89B).

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.