Ein sehr interessanter Artikel.... What Is Avanir Pharmaceuticals Really Worth? I didn’t think Avanir Pharmaceuticals (AVNR) was going to get approval for Neudextra and I was wrong. So in keeping with good journalism, I decided to write a follow up article. Of course, I could write one listing the reasons why the company is overvalued to make up for the fact I was wrong, but I see I was beaten to the punch. Instead, I decided to turn my focus on helping longs answer the question I have seen floating around the message boards: What is the true value of the stock? To do so I had to make a few assumptions: - I have heard sales projections from $350M to $600M. Any valuation today has to be based on $350M with any sales increases rewarding shareholders. Otherwise there is no reason to speculate on the stock.
- Cost of goods sold and expenses will run about 70% of gross revenues and taxes at 35% of net income. These numbers are fairly standard industry wide.
- A PE multiplier needs to be applied. In the first scenario we will apply a PE ratio of 21 which represents an average for biotechnology companies.
Using the criteria above resulted in an initial valuation of $15.25/share. This is in line with some of the recent price targets I have seen from analysts. Revenue | $350,000,000 | Expenses | $245,000,000 | Income | $105,000,000 | Taxes | $36,750,000 | Net Income | $68,250,000 | Common Shares | 93,968,532 | EPS | $0.73 | PE Multiplier | 21 | Value per Share | $15.25 |
So why is the stock trading so much lower? The first problem I see is the PE multiplier. Avanir is no longer a small biotech company; it has a product and approval and it’s time to start manufacturing. As such it should be valued more in line with the major drug manufacturers which would represent a PE ratio of 11. Plug this multiplier into the equation and we get a valuation of about $8.00/share, very close to many of the pre-approval price estimates of $8-$9. Revenue | $350,000,000 | Expenses | $245,000,000 | Income | $105,000,000 | Taxes | $36,750,000 | Net Income | $68,250,000 | Common Shares | 93,968,532 | EPS | $0.73 | PE Multiplier | 11 | Value per Share | $7.99 |
So I found the pre-approval valuation, but still need to explain the stock’s current price. For that we go to the latest 10-Q and dig to find two things most analysts missed: - There is an additional 20.5M in options, warrants and restricted stock not accounted for. These would increase the common shares outstanding to about 114.5M.
- Way deep down in the 10-Q came this little notation under Commitments & Contingencies:
In addition, the Company is obligated to pay CNS a royalty ranging from approximately 5% to 8% of net GAAP revenues.
That second factor has a big influence on the valuation. Notice how it was not income but revenues, pulling 8% off the top before even starting. Adjusting our calculations for the above changes results in the following: Revenue | $350,000,000 | Royalty | $28,000,000 | Adjusted Revenue | $322,000,000 | Expenses | $245,000,000 | Income | $77,000,000 | Taxes | $26,950,000 | Net Income | $50,050,000 | Common Shares | 114,516,700 | EPS | $0.44 | PE Multiplier | 11 | Per Share Value | $4.81 |
And there you have it, $4.81/share, almost identical to Friday’s closing price of $4.79/share. But don’t despair, longs. Withstanding a market turn or sales under $350M this valuation is conservative and should mark the bottom. You already know the drug works, now the game is banking on management. So here’s a final thought. If management can reach sales of $475M, keep COGS & expenses at 60%, and in this upward market garner a PE ratio of 15, you have a $13 stock on your hands. Not a bad return. Link: http://seekingalpha.com/article/...ceuticals-really-worth?source=feed Vor allem die Kommentare lesen sich sehr interessant... |
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