<div id="readability-page-1"><div><h3>Key Insights</h3><ul><li> Using the 2 Stage Free Cash Flow to Equity, Sunrise Communications fair value estimate is CHF55.70 </li> <li> Sunrise Communications is estimated to be 28% undervalued based on current share price of CHF40.00 </li> <li>  The CHF47.32 analyst price target for SUNN is 15% less than our estimate of fair value </li> </ul><p>In this article we are going to estimate the intrinsic value of Sunrise Communications AG (VTX:SUNN) by taking the forecast future cash flows of the company and discounting them back to today's value.  The Discounted Cash Flow (DCF) model is the tool we will apply to do this.  There's really not all that much to it, even though it might appear quite complex.</p><p> Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation.  Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. </p><p>AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.</p><h2> The Model </h2> <p> We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate.  In the first stage we need to estimate the cash flows to the business over the next ten years.   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.  </p><p> Generally we assume that a dollar today is more valuable than a dollar in the future,  and so the sum of these future cash flows is then discounted to today's value: </p><h4> 10-year free cash flow (FCF) forecast </h4><table><tbody><tr><td> </td><td><strong>2026</strong></td><td><strong>2027</strong></td><td><strong>2028</strong></td><td><strong>2029</strong></td><td><strong>2030</strong></td><td><strong>2031</strong></td><td><strong>2032</strong></td><td><strong>2033</strong></td><td><strong>2034</strong></td><td><strong>2035</strong></td></tr><tr><td><strong> Levered FCF (CHF, Millions) </strong></td><td>CHF372.7m</td><td>CHF374.1m</td><td>CHF358.2m</td><td>CHF281.5m</td><td>CHF281.5m</td><td>CHF260.3m</td><td>CHF247.0m</td><td>CHF238.6m</td><td>CHF233.2m</td><td>CHF229.8m</td></tr><tr><td><strong>Growth Rate Estimate Source</strong></td><td>Analyst x5</td><td>Analyst x5</td><td>Analyst x3</td><td>Analyst x1</td><td>Analyst x1</td><td>Est @ -7.51%</td><td>Est @ -5.11%</td><td>Est @ -3.43%</td><td>Est @ -2.26%</td><td>Est @ -1.43%</td></tr><tr><td><strong> Present Value (CHF, Millions) Discounted @ 6.8% </strong></td><td>CHF349</td><td>CHF328</td><td>CHF294</td><td>CHF217</td><td>CHF203</td><td>CHF176</td><td>CHF156</td><td>CHF141</td><td>CHF129</td><td>CHF119</td></tr></tbody></table><p><i>(&#34;Est&#34; = FCF growth rate estimated by Simply Wall St)</i><br/><strong>Present Value of 10-year Cash Flow (PVCF)</strong> = CHF2.1b</p><p> The second stage is also known as Terminal Value, this is the business's cash flow after the first stage.  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 (0.5%) 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 6.8%. </p><p><strong>Terminal Value (TV)</strong>= FCF<sub>2035</sub> × (1 + g) ÷ (r – g) = CHF230m× (1 + 0.5%) ÷ (6.8%– 0.5%) = CHF3.7b</p><p><strong>Present Value of Terminal Value (PVTV)</strong>= TV / (1 + r)<sup>10</sup>= CHF3.7b÷ ( 1 + 6.8%)<sup>10</sup>= CHF1.9b</p><p> The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value,  which in this case is CHF4.0b.  In the final step we divide the equity value by the number of shares outstanding.  Compared to the current share price of CHF40.0, the company appears   a touch undervalued    at a 28% discount to where the stock price trades currently.   The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. </p><figure><img height="760" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/282640984-dcf-1-dark-2/1768981682266?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1706" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/282640984-dcf-1-dark-2/1768981682266"/><figcaption>SWX:SUNN Discounted Cash Flow January 21st 2026</figcaption></figure> <h2> The Assumptions </h2><p> 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.  You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them.  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 Sunrise Communications 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 6.8%, which is based on a levered beta of 1.490. 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. </p> <p><span> View our latest analysis for Sunrise Communications </span></p><h3>SWOT Analysis for Sunrise Communications</h3><div><div><p><strong>Strength</strong></p><ul><li>Debt is well covered by cash flow.</li></ul> <ul><li>Dividend is in the top 25% of dividend payers in the market.</li></ul> <ul> Dividend information for SUNN.</ul> </div><div><p><strong>Weakness</strong></p><ul><li>Interest payments on debt are not well covered.</li></ul> <ul> What are analysts forecasting for SUNN?</ul> </div><div><p><strong>Opportunity</strong></p><ul><li>Forecast to reduce losses next year.</li></ul> <ul><li>Has sufficient cash runway for more than 3 years based on current free cash flows.</li></ul> <ul><li>Good value based on P/S ratio and estimated fair value.</li></ul> </div><div><p><strong>Threat</strong></p><ul><li>No apparent threats visible for SUNN.</li></ul></div></div><h2> Next Steps: </h2><p> Although the valuation of a company is important, it  shouldn't be the only metric you look at when researching a company.  The DCF model is not a perfect stock valuation tool.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation.   Can we work out why the company is trading at a discount to intrinsic value?   For Sunrise Communications, there are three  pertinent  aspects  you should explore: </p><ol> <li><strong>Financial Health</strong>: Does SUNN have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.</li> <li><strong>Future Earnings</strong>: How does SUNN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.</li><li> <strong>Other High Quality Alternatives</strong>: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! </li> </ol><p>PS. Simply Wall St updates its DCF calculation for every Swiss stock every day, so if you want to find the intrinsic value of any other stock just search here.</p></div></div>

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<p>Sunrise Communications AG (VTX:SUNN) is estimated to be 28% undervalued, with a fair value of CHF55.70 compared to the current share price of CHF40.00. Using a 2-stage Discounted Cash Flow (DCF) model, the intrinsic value is calculated based on future cash flows. The analysis suggests a total equity value of CHF4.0 billion, indicating a potential investment opportunity. However, the DCF model's assumptions significantly impact the valuation, and it is recommended to reassess the inputs for a more accurate estimate.</p>

Is There An Opportunity With Sunrise Communications AG's (VTX:SUNN) 28% Undervaluation?