A Look At The Fair Value Of Integra LifeSciences Holdings Corporation (NASDAQ:IART)

Simply Wall St·01/08/2026 10:03:38

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Key Insights

Integra LifeSciences Holdings' estimated fair value is US$14.21 based on 2 Stage Free Cash Flow to Equity
With US$13.15 share price, Integra LifeSciences Holdings appears to be trading close to its estimated fair value
The US$15.50 analyst price target for IART is 9.1% more than our estimate of fair value

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Integra LifeSciences Holdings Corporation (NASDAQ:IART) as an investment opportunity by projecting its future cash flows and then discounting them to today's value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.

Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.

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The Calculation

We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.

Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:

10-year free cash flow (FCF) forecast

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035
Levered FCF ($, Millions)	US$602.1m	US$160.2m	US$103.9m	US$76.4m	US$63.1m	US$55.9m	US$52.1m	US$50.1m	US$49.2m	US$49.1m
Growth Rate Estimate Source	Analyst x3	Analyst x2	Analyst x1	Est @ -26.42%	Est @ -17.52%	Est @ -11.28%	Est @ -6.92%	Est @ -3.87%	Est @ -1.73%	Est @ -0.23%
Present Value ($, Millions) Discounted @ 12%	US$537	US$127	US$73.6	US$48.3	US$35.5	US$28.1	US$23.3	US$20.0	US$17.5	US$15.6

("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$926m

We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 12%.

Terminal Value (TV)= FCF₂₀₃₅ × (1 + g) ÷ (r – g) = US$49m× (1 + 3.3%) ÷ (12%– 3.3%) = US$569m

Present Value of Terminal Value (PVTV)= TV / (1 + r)¹⁰= US$569m÷ ( 1 + 12%)¹⁰= US$181m

The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$1.1b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$13.2, the company appears about fair value at a 7.4% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.

dcf — NasdaqGS:IART Discounted Cash Flow January 8th 2026

Important Assumptions

We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Integra LifeSciences Holdings as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 12%, which is based on a levered beta of 1.928. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.

See our latest analysis for Integra LifeSciences Holdings

SWOT Analysis for Integra LifeSciences Holdings

Strength

No major strengths identified for IART.

Weakness

Interest payments on debt are not well covered.

Opportunity

Forecast to reduce losses next year.

Has sufficient cash runway for more than 3 years based on current free cash flows.

Good value based on P/S ratio and estimated fair value.

Have IART insiders been buying lately?

Threat

Debt is not well covered by operating cash flow.

Is IART well equipped to handle threats?

Next Steps:

Although the valuation of a company is important, it is only one of many factors that you need to assess for a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Integra LifeSciences Holdings, there are three relevant elements you should consider:

Risks: Take risks, for example - Integra LifeSciences Holdings has 1 warning sign we think you should be aware of.
Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for IART's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!

PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NASDAQGS every day. If you want to find the calculation for other stocks just search here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.