Answer first
The operating thesis is unchanged. EV to normalized EBITA is primary because it compares Danaher operating engines before purchase amortization while making shareholders pay for Masimo through net debt.
$223.47, about 3.9% return.
$149.65, about -30.4% return.
$293.71, about 36.5% return.
Masimo leverage and weak cash conversion coincide with slower bioprocessing.
Company specific valuation
Primary: Enterprise value to normalized EBITA. Starting TTM normalized EBITA is $6.862 billion.
Why: It neutralizes acquisition amortization for operating comparison, then deducts net debt and models diluted shares.
Cross checks: Sum of parts is about $228 in base. Normalized free cash flow DCF is $158 to $177. The methods are reconciled, not averaged.
2027 scenario valuation
| Scenario | Probability | EBITA | EV multiple | Net debt | Shares | Target |
|---|---|---|---|---|---|---|
| Bear | 25% | $6.40bn | 20.0x | $22.5bn | 705.0m | $149.65 |
| Base | 50% | $7.40bn | 24.0x | $20.5bn | 703.0m | $223.47 |
| Bull | 25% | $8.30bn | 27.0x | $18.5bn | 700.0m | $293.71 |
Weighted value $222.58. Reference price and operating evidence are frozen.
Five pillar decomposition
| Pillar | Weight | Prior | Revised |
|---|---|---|---|
| Business Quality | 30% | 8.1 | 8.1 |
| Management Quality | 15% | 7.3 | 7.3 |
| Industry Tailwind | 15% | 7.3 | 7.3 |
| Valuation and Margin of Safety | 30% | 6.1 | 4.5 |
| Risk and Asymmetry | 10% | 5.8 | 4.2 |
| Weighted average | 100% | 7.03 | 6.390 |
Methodology only delta
Prior targets were $184.80, $244.40, and $306.00. Revised targets are $149.65, $223.47, and $293.71. Only valuation, risk, conviction, sizing, and linked summary figures changed.
Downloads
Revised assessment PDFRevised deep teaching reportRevised formula workbookRevised source workspaceOriginal immutable assessment PDFOriginal immutable deep teaching reportThe original package remains available and unchanged.