What is HBMN.SW's Intrinsic value?

HBM Healthcare Investments AG (HBMN.SW) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, HBM Healthcare Investments AG's estimated intrinsic value ranges from $34.68 to $895.00 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $895.00 +434.6%
Discounted Cash Flow (5Y) $228.65 +36.6%
Dividend Discount Model (Multi-Stage) $305.07 +82.2%
Dividend Discount Model (Stable) $34.68 -79.3%

Is HBM Healthcare Investments AG (HBMN.SW) undervalued or overvalued?

With the current market price at $167.40, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate HBM Healthcare Investments AG's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 1.0% 1.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.97 1.16
Cost of equity 5.9% 9.0%
Cost of debt 4.0% 4.5%
Tax rate 16.8% 18.0%
Debt/Equity ratio 0.08 0.08
After-tax WACC 5.7% 8.6%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $42 (FY03-2025) to $2,453 (FY03-2035)
  • Net profit margin expansion from 44% to 36%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $229 $1,688M 78.7%
10-Year Growth $895 $6,326M 72.0%
5-Year EBITDA $157 $1,189M 69.7%
10-Year EBITDA $649 $4,611M 61.5%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 276.1%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.5%
  • Long-term growth rate: 0.5%
  • Fair value: $305.07 (82.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.0% (Low) to 5.9% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $21 to $49
  • Selected fair value: $34.68 (-79.3% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $1165M
Enterprise Value $1262M
Trailing P/E 62.84
Forward P/E 24.94
Trailing EV/EBITDA 7.40
Current Dividend Yield 415.16%
Dividend Growth Rate (5Y) -1.12%
Debt-to-Equity Ratio 0.08

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 33% $268.50
Discounted Cash Flow (5Y) 28% $57.16
Dividend Discount Model (Multi-Stage) 22% $61.01
Dividend Discount Model (Stable) 17% $5.20
Weighted Average 100% $435.42

Investment Conclusion

Based on our comprehensive valuation analysis, HBM Healthcare Investments AG's weighted average intrinsic value is $435.42, which is approximately 160.1% above the current market price of $167.40.

Key investment considerations:

  • Strong projected earnings growth (44% to 36% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.08)

Given these factors, we believe HBM Healthcare Investments AG is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.