TECH Bio-Techne
Quality reagent franchise, but at 9x sales the price assumes a recovery that hasn't happened.
The story
Bio-Techne sells high-purity proteins, antibodies and reagents, plus spatial biology and diagnostics tools, to biopharma and academic researchers. Its moat is quality, citation history and switching costs: labs rarely re-validate an assay to save a few dollars. The business is maturing. Revenue has been flat at about $1.2B because biotech funding and NIH budgets are weak, and reported GAAP margins have been depressed by acquisition amortization, restructuring and impairments rather than by any decline in the core franchise.
Year-one growth of 4% reflects a slow recovery in research-tools demand. The 30% target margin sits below the historical ~31% GAAP level and the mid-30s adjusted level, because the diagnostics and spatial mix is lower margin. Marginal sales-to-capital is set at 1.2 rather than the reported 0.53, since the reported figure is inflated by acquisition goodwill and organic reagent growth needs little capital. The 10-year horizon credits a real but not unassailable moat.
Value drivers
| Revenue growth (Y1) | 4.0% |
| Terminal growth | 3.5% |
| Forecast horizon | 10y |
| Target operating margin | 30.0% |
| Years to target margin | 5 |
| Sales-to-capital | 1.20 |
| Beta | 1.00 |
| Failure probability | 1.0% |
| Cost of capital (WACC) | 9.4% |
| Terminal WACC | 9.4% |
Valuation bridge
| PV of explicit FCFF | 1.66B |
| PV of terminal value | 1.79B |
| Equity value | 3.48B |
| ÷ shares → per share | $22.17 |
News
neutral -0.10 · 8 articles
- Bio Techne (TECH) And The Valuation Case Behind Its Recent Rebound
- Why Is Techne (TECH) Down 0.1% Since Last Earnings Report?
- Winners And Losers Of Q2: Bio-Techne (NASDAQ:TECH) Vs The Rest Of The Research Tools & Consumables Stocks
- 1 Surging Stock for Long-Term Investors and 2 That Underwhelm
- 1 Profitable Stock to Own for Decades and 2 We Turn Down
- Is Wall Street Bullish or Bearish on Bio-Techne Stock?
- 3 High-Flying Stocks We Approach with Caution
- TECH Q4 Earnings Meet Estimates, Revenues Surpass, Stock Rises
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 1.26B | 4.0% | 22.5% | 214.65M | 40.50M | 174.15M | 159.21M |
| 2 | 1.31B | 3.9% | 24.4% | 241.78M | 41.54M | 200.24M | 167.36M |
| 3 | 1.36B | 3.9% | 26.2% | 270.56M | 42.57M | 228.00M | 174.21M |
| 4 | 1.42B | 3.8% | 28.1% | 301.06M | 43.59M | 257.47M | 179.85M |
| 5 | 1.47B | 3.8% | 30.0% | 333.32M | 44.61M | 288.71M | 184.37M |
| 6 | 1.53B | 3.7% | 30.0% | 345.72M | 45.61M | 300.11M | 175.21M |
| 7 | 1.58B | 3.7% | 30.0% | 358.40M | 46.60M | 311.80M | 166.42M |
| 8 | 1.64B | 3.6% | 30.0% | 371.34M | 47.58M | 323.77M | 157.98M |
| 9 | 1.70B | 3.6% | 30.0% | 384.55M | 48.54M | 336.01M | 149.89M |
| 10 | 1.76B | 3.5% | 30.0% | 398.01M | 49.48M | 348.53M | 142.14M |
Key risks
- Prolonged weakness in biotech funding and NIH budgets keeps organic growth in the low single digits
- Spatial biology and diagnostics fail to reach reagent-level margins, capping the consolidated margin
- China and pricing pressure from lower-cost reagent suppliers
Catalysts
- Recovery in the biopharma funding cycle drives mid- to high-single-digit organic growth
- Restructuring savings and the end of one-off charges bring GAAP margins back toward 30%