Incyte Corporation (INCY) Intrinsic Value

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

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Incyte Corporation (INCY)

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Intrinsic Value (DCF)

Current$105.24

→

Intrinsic$35.72

-66%

$26.86$35.72$52.56

Growth 14%

Discount 10%

Terminal 3%

Current price reflects execution expectations above 14% growth — not unreasonable for quality businesses.

Range: Bear $27 → Bull $53. Current price implies expectations above the base case, closer to bull expectations.

Current price reflects assumptions at the upper end of our valuation range (bull case: $53).

Discount ↓Growth →	10%	12%	14%	16%
8%	$41	$44	$47	$51
10%	$32	$34	$36	$38
12%	$26	$28	$29	$31
14%	$23	$24	$25	$26

Bull Case

Bull case ($53) with 17% growth, 9% discount rate
Conservative 14% growth assumption is achievable based on track record

Bear Case

Bear case ($27) implies 74% downside at 12% growth, 12% discount
Trading 66% above base case — execution must exceed assumptions to justify
Price exceeds bull case ($53) — requires exceptional execution

Intrinsic Value vs Current Price

5-Year Cash Flow Projection

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5-Year Free Cash Flow Projection

Year 1$285.09M

Year 2$326.32M

Year 3$373.51M

Year 4$427.52M

Year 5$489.34M

Terminal$7.20B

📐 Model Inputs

Growth Rate14.5%5Y CAGR (cascade: 5Y→3Y→TTM)

Discount Rate10.0%WACC estimate

Terminal Growth3.0%Perpetuity rate

Base Free Cash Flow$249.07MTTM 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.

Frequently Asked Questions

Is INCY stock undervalued or overvalued?

🔴 OVERVALUED

INCY trades at $105.24 vs. our DCF-derived intrinsic value of $35.72, implying -67% downside. Using a 10.0% WACC and 14.5% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($48.14) suggests limited upside.

What is INCY's intrinsic value?

Using a 5-year DCF model: Base FCF of $249M, projected at 14.5% 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 $-1.64B net debt and dividing by 0.21B shares: Bear $26.94 | Base $35.72 | Bull $48.14. Current price $105.24 implies -67% to base case.

How is INCY's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 14.5% 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 ($5.88B).

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: 23.6x.

Incyte Corporation (INCY) Intrinsic Value