Intrinsic value of Applied Genetic Technologies - AGTC

Previous Close

$5.10

  Intrinsic Value

$1.55

stock screener

  Rating & Target

str. sell

-70%

  Value-price divergence*

0%

Previous close

$5.10

 
Intrinsic value

$1.55

 
Up/down potential

-70%

 
Rating

str. sell

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AGTC 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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

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, %
  2,250.00
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  47
  48
  49
  50
  52
  53
  55
  57
  59
  61
  63
  66
  69
  71
  74
  78
  81
  85
  89
  93
  97
  101
  106
  111
  116
  122
  128
  134
  140
  147
  154
Variable operating expenses, $m
 
  130
  133
  136
  140
  144
  149
  154
  159
  165
  171
  178
  185
  193
  201
  210
  219
  229
  239
  250
  262
  274
  287
  300
  314
  329
  345
  361
  379
  397
  417
Fixed operating expenses, $m
 
  24
  24
  25
  25
  26
  27
  27
  28
  29
  29
  30
  31
  32
  32
  33
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
Total operating expenses, $m
  49
  154
  157
  161
  165
  170
  176
  181
  187
  194
  200
  208
  216
  225
  233
  243
  253
  264
  275
  287
  300
  313
  327
  341
  356
  372
  389
  406
  425
  444
  465
Operating income, $m
  -2
  -105
  -108
  -110
  -113
  -117
  -120
  -124
  -128
  -133
  -137
  -142
  -148
  -153
  -159
  -166
  -172
  -179
  -187
  -194
  -202
  -211
  -220
  -230
  -240
  -250
  -261
  -272
  -285
  -297
  -311
EBITDA, $m
  -1
  -105
  -107
  -110
  -113
  -116
  -120
  -124
  -128
  -132
  -137
  -142
  -147
  -153
  -159
  -165
  -172
  -179
  -186
  -194
  -202
  -211
  -220
  -229
  -239
  -249
  -260
  -272
  -284
  -297
  -310
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
Earnings before tax, $m
  -1
  -105
  -108
  -110
  -114
  -117
  -121
  -125
  -129
  -133
  -138
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -189
  -197
  -205
  -214
  -223
  -233
  -243
  -254
  -265
  -277
  -289
  -302
  -316
Tax expense, $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
  0
Net income, $m
  -1
  -105
  -108
  -110
  -114
  -117
  -121
  -125
  -129
  -133
  -138
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -189
  -197
  -205
  -214
  -223
  -233
  -243
  -254
  -265
  -277
  -289
  -302
  -316

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  99
  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
  181
  84
  86
  88
  90
  93
  96
  99
  103
  107
  111
  115
  120
  125
  130
  136
  142
  148
  155
  162
  169
  177
  185
  194
  203
  213
  223
  233
  245
  257
  269
Adjusted assets (=assets-cash), $m
  82
  84
  86
  88
  90
  93
  96
  99
  103
  107
  111
  115
  120
  125
  130
  136
  142
  148
  155
  162
  169
  177
  185
  194
  203
  213
  223
  233
  245
  257
  269
Revenue / Adjusted assets
  0.573
  0.571
  0.570
  0.568
  0.578
  0.570
  0.573
  0.576
  0.573
  0.570
  0.568
  0.574
  0.575
  0.568
  0.569
  0.574
  0.570
  0.574
  0.574
  0.574
  0.574
  0.571
  0.573
  0.572
  0.571
  0.573
  0.574
  0.575
  0.571
  0.572
  0.572
Average production assets, $m
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
Working capital, $m
  48
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
Total debt, $m
  0
  1
  3
  5
  7
  10
  12
  15
  18
  22
  25
  29
  33
  38
  42
  47
  52
  58
  64
  70
  76
  83
  90
  98
  106
  115
  124
  133
  143
  153
  164
Total liabilities, $m
  72
  73
  75
  77
  79
  82
  84
  87
  90
  94
  97
  101
  105
  110
  114
  119
  124
  130
  136
  142
  148
  155
  162
  170
  178
  187
  196
  205
  215
  225
  236
Total equity, $m
  109
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
Total liabilities and equity, $m
  181
  83
  85
  88
  90
  93
  96
  99
  103
  107
  111
  115
  120
  125
  130
  136
  141
  148
  155
  162
  169
  177
  185
  194
  203
  213
  223
  233
  245
  256
  269
Debt-to-equity ratio
  0.000
  0.140
  0.300
  0.470
  0.660
  0.850
  1.050
  1.250
  1.460
  1.660
  1.870
  2.070
  2.270
  2.470
  2.660
  2.850
  3.030
  3.210
  3.380
  3.540
  3.700
  3.860
  4.010
  4.150
  4.290
  4.420
  4.550
  4.670
  4.790
  4.900
  5.000
Adjusted equity ratio
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  -105
  -108
  -110
  -114
  -117
  -121
  -125
  -129
  -133
  -138
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -189
  -197
  -205
  -214
  -223
  -233
  -243
  -254
  -265
  -277
  -289
  -302
  -316
Depreciation, amort., depletion, $m
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Funds from operations, $m
  137
  -105
  -107
  -110
  -113
  -117
  -120
  -124
  -129
  -133
  -138
  -143
  -148
  -154
  -160
  -167
  -173
  -181
  -188
  -196
  -204
  -213
  -222
  -232
  -242
  -253
  -264
  -276
  -289
  -302
  -315
Change in working capital, $m
  66
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  71
  -105
  -107
  -110
  -113
  -117
  -120
  -124
  -128
  -133
  -138
  -143
  -148
  -154
  -160
  -166
  -173
  -180
  -188
  -196
  -204
  -213
  -222
  -232
  -242
  -252
  -264
  -275
  -288
  -301
  -314
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
New CAPEX, $m
  -3
  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 investing activities, $m
  -101
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Free cash flow, $m
  -30
  -105
  -108
  -110
  -114
  -117
  -121
  -124
  -129
  -133
  -138
  -143
  -149
  -154
  -160
  -167
  -174
  -181
  -188
  -196
  -205
  -213
  -223
  -232
  -243
  -253
  -265
  -277
  -289
  -302
  -316
Issuance/(repayment) of debt, $m
  0
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
Issuance/(repurchase) of shares, $m
  19
  105
  108
  111
  114
  117
  121
  125
  129
  134
  139
  144
  149
  155
  161
  168
  175
  182
  189
  197
  206
  215
  224
  234
  244
  255
  266
  278
  291
  304
  318
Cash from financing (excl. dividends), $m  
  19
  106
  110
  113
  116
  119
  124
  128
  132
  137
  143
  148
  153
  159
  166
  173
  180
  188
  195
  203
  213
  222
  231
  242
  252
  263
  275
  287
  301
  314
  329
Total cash flow (excl. dividends), $m
  -10
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  12
  12
  13
Retained Cash Flow (-), $m
  -23
  -105
  -108
  -111
  -114
  -117
  -121
  -125
  -129
  -134
  -139
  -144
  -149
  -155
  -161
  -168
  -175
  -182
  -189
  -197
  -206
  -215
  -224
  -234
  -244
  -255
  -266
  -278
  -291
  -304
  -318
Prev. year cash balance distribution, $m
 
  99
  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
 
  -5
  -106
  -108
  -111
  -114
  -118
  -122
  -126
  -130
  -134
  -139
  -145
  -150
  -156
  -162
  -168
  -175
  -183
  -190
  -198
  -207
  -215
  -225
  -235
  -245
  -256
  -267
  -279
  -292
  -305
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -4
  -97
  -94
  -92
  -89
  -86
  -82
  -79
  -75
  -70
  -66
  -62
  -57
  -52
  -48
  -43
  -38
  -34
  -29
  -25
  -21
  -18
  -15
  -12
  -10
  -7
  -6
  -4
  -3
  -2
Current shareholders' claim on cash, %
  100
  7.3
  0.5
  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
  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

FINANCIAL RATIOS  of  Applied Genetic Technologies (AGTC)

Valuation Ratios
P/E Ratio -92.1
Price to Sales 2
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 1.3
Price to Free Cash Flow 1.4
Growth Rates
Sales Growth Rate 2250%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.7%
Ret/ On Assets - 3 Yr. Avg. -20.3%
Return On Total Capital -1%
Ret/ On T. Cap. - 3 Yr. Avg. -21.1%
Return On Equity -1%
Return On Equity - 3 Yr. Avg. -21.3%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -933.3%
Operating Margin -4.3%
Oper. Margin - 3 Yr. Avg. -851.4%
Pre-Tax Margin -2.1%
Pre-Tax Margin - 3 Yr. Avg. -934%
Net Profit Margin -2.1%
Net Profit Margin - 3 Yr. Avg. -934%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AGTC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGTC stock intrinsic value calculation we used $47 million for the last fiscal year's total revenue generated by Applied Genetic Technologies. The default revenue input number comes from 2016 income statement of Applied Genetic Technologies. 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 AGTC stock valuation model: a) initial revenue growth rate of 2% 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 4.3%, whose default value for AGTC is calculated based on our internal credit rating of Applied Genetic Technologies, 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 Applied Genetic Technologies.
    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 AGTC stock the variable cost ratio is equal to 270.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $23 million in the base year in the intrinsic value calculation for AGTC 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 Applied Genetic Technologies.

Corporate tax rate of 27% is the nominal tax rate for Applied Genetic Technologies. 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 AGTC 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 AGTC are equal to 5.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Applied Genetic Technologies 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 AGTC is equal to -10%. 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 - $109 million for Applied Genetic Technologies - 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 17.628 million for Applied Genetic Technologies 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 Applied Genetic Technologies at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Applied Genetic Technologies posts 3Q loss   [May-10-17 05:30PM  Associated Press]
▶ Applied Genetic Technologies posts 2Q profit   [Feb-08-17 07:15PM  Associated Press]
▶ AGTC to Present at Upcoming Conferences   [Dec-05-16 07:00AM  GlobeNewswire]
▶ AGTC to Present at Upcoming Scientific Conferences   [Oct-04-16 07:00AM  GlobeNewswire]
▶ Applied Genetics stock suffers record plunge to record low   [Sep-13-16 04:10PM  at MarketWatch]
▶ AGTC to Host Research Day on June 21, 2016 in New York   [Jun-09-16 07:00AM  GlobeNewswire]
Stock chart of AGTC Financial statements of AGTC
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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