Intrinsic value of Acorda Therapeutics - ACOR

Previous Close

$26.40

  Intrinsic Value

$8.90

stock screener

  Rating & Target

str. sell

-66%

Previous close

$26.40

 
Intrinsic value

$8.90

 
Up/down potential

-66%

 
Rating

str. sell

We calculate the intrinsic value of ACOR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.48
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
Revenue, $m
  520
  539
  560
  582
  606
  631
  657
  686
  716
  748
  781
  817
  854
  894
  935
  979
  1,026
  1,075
  1,126
  1,180
  1,237
  1,297
  1,360
  1,426
  1,496
  1,569
  1,646
  1,727
  1,812
  1,901
  1,995
Variable operating expenses, $m
 
  501
  519
  538
  559
  581
  605
  629
  656
  684
  713
  716
  749
  784
  820
  859
  900
  942
  987
  1,035
  1,085
  1,137
  1,193
  1,251
  1,312
  1,376
  1,444
  1,515
  1,589
  1,667
  1,750
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  556
  501
  519
  538
  559
  581
  605
  629
  656
  684
  713
  716
  749
  784
  820
  859
  900
  942
  987
  1,035
  1,085
  1,137
  1,193
  1,251
  1,312
  1,376
  1,444
  1,515
  1,589
  1,667
  1,750
Operating income, $m
  -36
  38
  41
  44
  46
  49
  53
  56
  60
  64
  68
  100
  105
  110
  115
  121
  126
  132
  139
  145
  152
  160
  167
  175
  184
  193
  203
  212
  223
  234
  246
EBITDA, $m
  -14
  88
  91
  95
  99
  103
  107
  112
  117
  122
  127
  133
  139
  146
  152
  160
  167
  175
  184
  192
  202
  211
  222
  232
  244
  256
  268
  282
  295
  310
  325
Interest expense (income), $m
  6
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  37
  39
  41
  44
  47
  50
  53
  56
  59
  63
  66
  70
  74
Earnings before tax, $m
  -42
  27
  29
  30
  32
  34
  36
  39
  41
  44
  46
  77
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  137
  143
  150
  157
  164
  171
Tax expense, $m
  -6
  7
  8
  8
  9
  9
  10
  10
  11
  12
  13
  21
  22
  23
  23
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  37
  39
  40
  42
  44
  46
Net income, $m
  -35
  20
  21
  22
  24
  25
  27
  28
  30
  32
  34
  56
  59
  61
  63
  66
  69
  71
  74
  78
  81
  84
  88
  92
  96
  100
  105
  109
  114
  120
  125

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  159
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,342
  1,226
  1,272
  1,323
  1,376
  1,433
  1,494
  1,558
  1,627
  1,699
  1,775
  1,856
  1,941
  2,031
  2,126
  2,226
  2,331
  2,442
  2,559
  2,682
  2,811
  2,948
  3,091
  3,241
  3,400
  3,566
  3,741
  3,925
  4,118
  4,321
  4,535
Adjusted assets (=assets-cash), $m
  1,183
  1,226
  1,272
  1,323
  1,376
  1,433
  1,494
  1,558
  1,627
  1,699
  1,775
  1,856
  1,941
  2,031
  2,126
  2,226
  2,331
  2,442
  2,559
  2,682
  2,811
  2,948
  3,091
  3,241
  3,400
  3,566
  3,741
  3,925
  4,118
  4,321
  4,535
Revenue / Adjusted assets
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
Average production assets, $m
  624
  647
  671
  698
  726
  756
  788
  822
  858
  896
  937
  979
  1,024
  1,072
  1,122
  1,174
  1,230
  1,288
  1,350
  1,415
  1,483
  1,555
  1,631
  1,710
  1,794
  1,881
  1,974
  2,071
  2,173
  2,280
  2,392
Working capital, $m
  125
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -114
  -120
  -126
Total debt, $m
  325
  348
  375
  404
  434
  467
  502
  538
  577
  619
  662
  709
  757
  809
  863
  920
  981
  1,044
  1,111
  1,181
  1,255
  1,333
  1,415
  1,501
  1,592
  1,687
  1,787
  1,892
  2,003
  2,119
  2,241
Total liabilities, $m
  678
  701
  728
  757
  787
  820
  855
  891
  930
  972
  1,015
  1,062
  1,110
  1,162
  1,216
  1,273
  1,334
  1,397
  1,464
  1,534
  1,608
  1,686
  1,768
  1,854
  1,945
  2,040
  2,140
  2,245
  2,356
  2,472
  2,594
Total equity, $m
  664
  525
  545
  566
  589
  613
  639
  667
  696
  727
  760
  794
  831
  869
  910
  953
  998
  1,045
  1,095
  1,148
  1,203
  1,262
  1,323
  1,387
  1,455
  1,526
  1,601
  1,680
  1,763
  1,850
  1,941
Total liabilities and equity, $m
  1,342
  1,226
  1,273
  1,323
  1,376
  1,433
  1,494
  1,558
  1,626
  1,699
  1,775
  1,856
  1,941
  2,031
  2,126
  2,226
  2,332
  2,442
  2,559
  2,682
  2,811
  2,948
  3,091
  3,241
  3,400
  3,566
  3,741
  3,925
  4,119
  4,322
  4,535
Debt-to-equity ratio
  0.489
  0.660
  0.690
  0.710
  0.740
  0.760
  0.780
  0.810
  0.830
  0.850
  0.870
  0.890
  0.910
  0.930
  0.950
  0.970
  0.980
  1.000
  1.010
  1.030
  1.040
  1.060
  1.070
  1.080
  1.090
  1.110
  1.120
  1.130
  1.140
  1.150
  1.150
Adjusted equity ratio
  0.427
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -35
  20
  21
  22
  24
  25
  27
  28
  30
  32
  34
  56
  59
  61
  63
  66
  69
  71
  74
  78
  81
  84
  88
  92
  96
  100
  105
  109
  114
  120
  125
Depreciation, amort., depletion, $m
  22
  50
  50
  51
  52
  53
  54
  56
  57
  58
  59
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  72
  76
  80
Funds from operations, $m
  50
  69
  71
  74
  76
  78
  81
  84
  87
  90
  93
  89
  93
  97
  101
  105
  110
  114
  119
  125
  130
  136
  142
  149
  156
  163
  171
  178
  187
  196
  205
Change in working capital, $m
  15
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Cash from operations, $m
  35
  71
  73
  75
  77
  80
  83
  86
  89
  92
  95
  91
  95
  99
  103
  108
  113
  117
  123
  128
  134
  140
  146
  153
  160
  168
  175
  184
  192
  201
  211
Maintenance CAPEX, $m
  0
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
New CAPEX, $m
  -7
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -76
  -79
  -84
  -88
  -92
  -97
  -102
  -107
  -113
Cash from investing activities, $m
  -74
  -44
  -47
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -81
  -86
  -90
  -95
  -100
  -105
  -110
  -115
  -121
  -128
  -133
  -141
  -148
  -155
  -163
  -171
  -179
  -189
Free cash flow, $m
  -39
  27
  26
  26
  26
  26
  25
  25
  25
  25
  25
  17
  18
  18
  18
  18
  18
  18
  18
  18
  19
  19
  19
  19
  20
  20
  20
  21
  21
  22
  22
Issuance/(repayment) of debt, $m
  0
  24
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  91
  95
  100
  105
  111
  116
  122
Issuance/(repurchase) of shares, $m
  76
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  46
  24
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  91
  95
  100
  105
  111
  116
  122
Total cash flow (excl. dividends), $m
  5
  51
  53
  55
  56
  58
  60
  62
  64
  66
  69
  64
  66
  69
  72
  75
  78
  81
  85
  89
  93
  97
  101
  105
  110
  115
  120
  126
  132
  138
  144
Retained Cash Flow (-), $m
  -61
  -19
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -36
  -38
  -41
  -43
  -45
  -47
  -50
  -53
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -91
Prev. year cash balance distribution, $m
 
  158
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  190
  33
  33
  34
  34
  34
  35
  35
  36
  36
  29
  30
  30
  31
  32
  33
  34
  35
  36
  37
  38
  40
  41
  42
  44
  46
  47
  49
  51
  53
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  179
  29
  27
  25
  24
  22
  20
  18
  16
  14
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Acorda Therapeutics, Inc. is a biopharmaceutical company. The Company focuses on developing therapies that restore function and improve the lives of people with neurological disorders. As of December 31, 2016, the Company marketed three United States Food and Drug Administration (FDA)-approved therapies, including Ampyra (dalfampridine) Extended Release Tablets, 10 milligram (mg), a treatment to improve walking in patients with multiple sclerosis (MS). The Company also markets Zanaflex Capsules and tablets, FDA-approved as short-acting drugs for the management of spasticity, and Qutenza, an FDA-approved dermal patch for the management of neuropathic pain associated with post-herpetic neuralgia, also known as post-shingles pain. The Company has a pipeline of neurological therapies addressing a range of disorders, including Parkinson's disease, migraine and MS. The Company's product candidate, CVT-301, is a self-administered inhaled formulation of levodopa.

FINANCIAL RATIOS  of  Acorda Therapeutics (ACOR)

Valuation Ratios
P/E Ratio -34.4
Price to Sales 2.3
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 34.4
Price to Free Cash Flow 43.1
Growth Rates
Sales Growth Rate 5.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 159
Current Ratio 0
LT Debt to Equity 48.8%
Total Debt to Equity 48.9%
Interest Coverage -6
Management Effectiveness
Return On Assets -2.4%
Ret/ On Assets - 3 Yr. Avg. 0.5%
Return On Total Capital -3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 0.1%
Return On Equity -5.5%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 79%
Gross Margin - 3 Yr. Avg. 80.1%
EBITDA Margin -2.7%
EBITDA Margin - 3 Yr. Avg. 5.3%
Operating Margin -6.9%
Oper. Margin - 3 Yr. Avg. 3%
Pre-Tax Margin -8.1%
Pre-Tax Margin - 3 Yr. Avg. 0.9%
Net Profit Margin -6.7%
Net Profit Margin - 3 Yr. Avg. -0%
Effective Tax Rate 14.3%
Eff/ Tax Rate - 3 Yr. Avg. 30.7%
Payout Ratio 0%

ACOR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ACOR stock intrinsic value calculation we used $520 million for the last fiscal year's total revenue generated by Acorda Therapeutics. The default revenue input number comes from 2016 income statement of Acorda Therapeutics. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ACOR stock valuation model: a) initial revenue growth rate of 3.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.2%, whose default value for ACOR is calculated based on our internal credit rating of Acorda Therapeutics, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Acorda Therapeutics.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ACOR stock the variable cost ratio is equal to 93.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ACOR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Acorda Therapeutics.

Corporate tax rate of 27% is the nominal tax rate for Acorda Therapeutics. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ACOR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ACOR are equal to 119.9%.

Life of production assets of 38.9 years is the average useful life of capital assets used in Acorda Therapeutics operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ACOR is equal to -6.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $664 million for Acorda Therapeutics - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 48.951 million for Acorda Therapeutics is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Acorda Therapeutics at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Acorda reports 4Q loss   [10:29AM  Associated Press]
▶ Acorda Fourth Quarter/Year End 2017 Update   [Feb-02-18 07:00AM  Business Wire]
▶ This Biotech Stock Rocketed 15% On Rumors Biogen Could Buy It   [Jan-19-18 04:53PM  Investor's Business Daily]
▶ [$$] Acorda Therapeutics Exploring a Potential Sale   [Jan-05-18 11:01PM  The Wall Street Journal]
▶ [$$] Acorda Therapeutics Exploring a Potential Sale   [04:10PM  The Wall Street Journal]
Financial statements of ACOR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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