Definitive Analysis
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Royalty Pharma plc (RPRX)

Company Dividend Discount ModelIndustry: BiotechnologySector: Healthcare

Valuation Snapshot

Stable Growth$9.44 - $13.59$11.47
Multi-Stage$15.75 - $17.27$16.49
Blended Fair Value$13.98
Current Price$36.03
Upside-61.20%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS-12.63%0.00%0.660.630.580.500.701.291.421.280.000.00
YoY Growth--5.06%7.50%16.88%-28.32%-46.18%-9.22%10.77%0.00%0.00%0.00%
Dividend Yield--2.11%2.09%1.62%1.28%1.59%2.90%3.20%0.00%0.00%0.00%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)764.96
(-) Cash Dividends Paid (M)377.57
(=) Cash Retained (M)387.39
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)152.9995.6257.37
Cash Retained (M)387.39387.39387.39
(-) Cash Required (M)-152.99-95.62-57.37
(=) Excess Retained (M)234.40291.77330.02
(/) Shares Outstanding (M)572.15572.15572.15
(=) Excess Retained per Share0.410.510.58
LTM Dividend per Share0.660.660.66
(+) Excess Retained per Share0.410.510.58
(=) Adjusted Dividend1.071.171.24
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-2.00%-1.00%0.00%
Fair Value$9.44$11.47$13.59
Upside / Downside-73.79%-68.17%-62.27%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)764.96757.31749.73742.24734.81727.47749.29
Payout Ratio49.36%57.49%65.61%73.74%81.87%90.00%92.50%
Projected Dividends (M)377.57435.35491.94547.35601.60654.72693.09

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-2.00%-1.00%0.00%
Year 1 PV (M)395.01399.04403.07
Year 2 PV (M)405.00413.31421.70
Year 3 PV (M)408.87421.52434.42
Year 4 PV (M)407.76424.66442.08
Year 5 PV (M)402.65423.61445.45
PV of Terminal Value (M)6,989.967,353.947,732.93
Equity Value (M)9,009.259,436.089,879.65
Shares Outstanding (M)572.15572.15572.15
Fair Value$15.75$16.49$17.27
Upside / Downside-56.30%-54.23%-52.07%

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