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Illumina, Inc. (ILMN) Intrinsic Value

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

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Illumina, Inc. (ILMN)

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Intrinsic Value (DCF)

Current$145.30
→
Intrinsic$148.18
+2%
$97.89$148.18$243.60
Market implies 24% growth for 5 years
ILMN appears fairly valued — current price aligns with our DCF estimate.
At $145, the market prices in continued strong cash flow growth (24%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $98 → Bull $244. Current price implies expectations near the base case.
Discount ↓Growth →21%23%25%27%
8%$185$200$217$234
10%$126$137$148$160
12%$94$102$110$119
14%$74$80$86$93

Bull Case

  • Bull case ($244) offers 68% upside at 30% growth, 9% discount
  • 2% margin of safety vs. base case estimate
  • Market-implied growth (24%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($98) implies 33% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$886.25M
Year 2$1.11B
Year 3$1.38B
Year 4$1.73B
Year 5$2.16B
Terminal$31.84B

📐 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$709.00MTTM 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 ILMN stock undervalued or overvalued?
🔴 OVERVALUED

ILMN trades at $145.30 vs. our DCF-derived intrinsic value of $121.14, implying -18% downside. Using a 10.0% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($187.29) suggests limited upside.

What is ILMN's intrinsic value?

Using a 5-year DCF model: Base FCF of $709M, 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 $1.50B net debt and dividing by 0.16B shares: Bear $76.22 | Base $121.14 | Bull $187.29. Current price $145.30 implies -18% to base case.

How is ILMN'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 ($20.76B).

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.