Intrinsic value of Alnylam Pharmaceuticals - ALNY

Previous Close

$121.89

  Intrinsic Value

$2.53

stock screener

  Rating & Target

str. sell

-98%

  Value-price divergence*

-102%

Previous close

$121.89

 
Intrinsic value

$2.53

 
Up/down potential

-98%

 
Rating

str. sell

 
Value-price divergence*

-102%

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

We calculate the intrinsic value of ALNY 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 11.1

 

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, %
  14.63
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  47
  75
  116
  174
  252
  356
  489
  656
  862
  1,109
  1,401
  1,739
  2,127
  2,563
  3,050
  3,586
  4,171
  4,805
  5,486
  6,213
  6,986
  7,802
  8,662
  9,564
  10,508
  11,495
  12,523
  13,594
  14,709
  15,868
  17,072
Variable operating expenses, $m
 
  618
  954
  1,427
  2,071
  2,921
  4,016
  5,391
  7,078
  9,108
  11,504
  14,286
  17,466
  21,052
  25,048
  29,452
  34,259
  39,464
  45,057
  51,029
  57,372
  64,077
  71,137
  78,547
  86,303
  94,404
  102,852
  111,650
  120,803
  130,320
  140,212
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
  472
  618
  954
  1,427
  2,071
  2,921
  4,016
  5,391
  7,078
  9,108
  11,504
  14,286
  17,466
  21,052
  25,048
  29,452
  34,259
  39,464
  45,057
  51,029
  57,372
  64,077
  71,137
  78,547
  86,303
  94,404
  102,852
  111,650
  120,803
  130,320
  140,212
Operating income, $m
  -425
  -542
  -838
  -1,253
  -1,818
  -2,566
  -3,527
  -4,734
  -6,217
  -7,999
  -10,104
  -12,546
  -15,339
  -18,489
  -21,998
  -25,866
  -30,088
  -34,659
  -39,571
  -44,816
  -50,387
  -56,275
  -62,476
  -68,983
  -75,795
  -82,910
  -90,329
  -98,055
  -106,094
  -114,453
  -123,140
EBITDA, $m
  -410
  -520
  -803
  -1,200
  -1,742
  -2,457
  -3,378
  -4,535
  -5,954
  -7,662
  -9,677
  -12,017
  -14,692
  -17,709
  -21,070
  -24,775
  -28,819
  -33,197
  -37,902
  -42,926
  -48,262
  -53,902
  -59,841
  -66,074
  -72,598
  -79,413
  -86,520
  -93,920
  -101,620
  -109,626
  -117,947
Interest expense (income), $m
  1
  5
  12
  23
  38
  58
  84
  118
  161
  213
  276
  350
  437
  535
  647
  771
  907
  1,057
  1,218
  1,392
  1,577
  1,774
  1,982
  2,201
  2,431
  2,672
  2,924
  3,186
  3,459
  3,743
  4,038
Earnings before tax, $m
  -410
  -548
  -850
  -1,276
  -1,856
  -2,623
  -3,611
  -4,852
  -6,377
  -8,212
  -10,380
  -12,897
  -15,776
  -19,024
  -22,645
  -26,636
  -30,995
  -35,716
  -40,789
  -46,208
  -51,964
  -58,049
  -64,458
  -71,184
  -78,226
  -85,582
  -93,253
  -101,241
  -109,553
  -118,196
  -127,179
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
  -410
  -548
  -850
  -1,276
  -1,856
  -2,623
  -3,611
  -4,852
  -6,377
  -8,212
  -10,380
  -12,897
  -15,776
  -19,024
  -22,645
  -26,636
  -30,995
  -35,716
  -40,789
  -46,208
  -51,964
  -58,049
  -64,458
  -71,184
  -78,226
  -85,582
  -93,253
  -101,241
  -109,553
  -118,196
  -127,179

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  627
  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
  1,263
  1,016
  1,570
  2,348
  3,407
  4,807
  6,608
  8,870
  11,647
  14,986
  18,929
  23,505
  28,738
  34,639
  41,213
  48,459
  56,370
  64,933
  74,136
  83,963
  94,399
  105,431
  117,048
  129,239
  142,001
  155,331
  169,231
  183,706
  198,767
  214,427
  230,703
Adjusted assets (=assets-cash), $m
  636
  1,016
  1,570
  2,348
  3,407
  4,807
  6,608
  8,870
  11,647
  14,986
  18,929
  23,505
  28,738
  34,639
  41,213
  48,459
  56,370
  64,933
  74,136
  83,963
  94,399
  105,431
  117,048
  129,239
  142,001
  155,331
  169,231
  183,706
  198,767
  214,427
  230,703
Revenue / Adjusted assets
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
Average production assets, $m
  72
  114
  177
  264
  383
  541
  744
  998
  1,311
  1,687
  2,131
  2,646
  3,235
  3,899
  4,639
  5,454
  6,345
  7,308
  8,344
  9,450
  10,625
  11,867
  13,174
  14,546
  15,983
  17,483
  19,048
  20,677
  22,372
  24,135
  25,967
Working capital, $m
  540
  -139
  -215
  -322
  -467
  -658
  -905
  -1,215
  -1,595
  -2,053
  -2,593
  -3,220
  -3,936
  -4,745
  -5,645
  -6,638
  -7,721
  -8,894
  -10,155
  -11,501
  -12,930
  -14,441
  -16,032
  -17,702
  -19,450
  -21,276
  -23,180
  -25,163
  -27,226
  -29,371
  -31,600
Total debt, $m
  150
  355
  653
  1,073
  1,643
  2,398
  3,369
  4,588
  6,085
  7,885
  10,010
  12,476
  15,297
  18,477
  22,021
  25,927
  30,190
  34,806
  39,766
  45,063
  50,688
  56,634
  62,896
  69,467
  76,346
  83,531
  91,023
  98,825
  106,942
  115,383
  124,156
Total liabilities, $m
  343
  548
  846
  1,266
  1,836
  2,591
  3,562
  4,781
  6,278
  8,078
  10,203
  12,669
  15,490
  18,670
  22,214
  26,120
  30,383
  34,999
  39,959
  45,256
  50,881
  56,827
  63,089
  69,660
  76,539
  83,724
  91,216
  99,018
  107,135
  115,576
  124,349
Total equity, $m
  920
  468
  724
  1,082
  1,571
  2,216
  3,046
  4,089
  5,369
  6,909
  8,726
  10,836
  13,248
  15,968
  18,999
  22,340
  25,986
  29,934
  34,177
  38,707
  43,518
  48,604
  53,959
  59,579
  65,463
  71,608
  78,015
  84,689
  91,632
  98,851
  106,354
Total liabilities and equity, $m
  1,263
  1,016
  1,570
  2,348
  3,407
  4,807
  6,608
  8,870
  11,647
  14,987
  18,929
  23,505
  28,738
  34,638
  41,213
  48,460
  56,369
  64,933
  74,136
  83,963
  94,399
  105,431
  117,048
  129,239
  142,002
  155,332
  169,231
  183,707
  198,767
  214,427
  230,703
Debt-to-equity ratio
  0.163
  0.760
  0.900
  0.990
  1.050
  1.080
  1.110
  1.120
  1.130
  1.140
  1.150
  1.150
  1.150
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
  1.170
  1.170
  1.170
  1.170
  1.170
  1.170
  1.170
  1.170
  1.170
  1.170
Adjusted equity ratio
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -410
  -548
  -850
  -1,276
  -1,856
  -2,623
  -3,611
  -4,852
  -6,377
  -8,212
  -10,380
  -12,897
  -15,776
  -19,024
  -22,645
  -26,636
  -30,995
  -35,716
  -40,789
  -46,208
  -51,964
  -58,049
  -64,458
  -71,184
  -78,226
  -85,582
  -93,253
  -101,241
  -109,553
  -118,196
  -127,179
Depreciation, amort., depletion, $m
  15
  23
  35
  53
  77
  108
  149
  200
  262
  337
  426
  529
  647
  780
  928
  1,091
  1,269
  1,462
  1,669
  1,890
  2,125
  2,373
  2,635
  2,909
  3,197
  3,497
  3,810
  4,135
  4,474
  4,827
  5,193
Funds from operations, $m
  -291
  -525
  -815
  -1,223
  -1,779
  -2,515
  -3,462
  -4,653
  -6,115
  -7,875
  -9,953
  -12,368
  -15,129
  -18,244
  -21,717
  -25,546
  -29,727
  -34,254
  -39,120
  -44,318
  -49,839
  -55,676
  -61,823
  -68,275
  -75,030
  -82,085
  -89,443
  -97,106
  -105,079
  -113,369
  -121,986
Change in working capital, $m
  17
  -52
  -76
  -107
  -145
  -192
  -247
  -310
  -380
  -457
  -540
  -627
  -717
  -808
  -901
  -993
  -1,084
  -1,173
  -1,261
  -1,346
  -1,430
  -1,511
  -1,591
  -1,670
  -1,748
  -1,826
  -1,904
  -1,983
  -2,063
  -2,145
  -2,229
Cash from operations, $m
  -308
  -473
  -739
  -1,117
  -1,634
  -2,323
  -3,215
  -4,343
  -5,735
  -7,417
  -9,413
  -11,741
  -14,412
  -17,436
  -20,816
  -24,553
  -28,643
  -33,081
  -37,860
  -42,972
  -48,409
  -54,165
  -60,232
  -66,605
  -73,282
  -80,260
  -87,539
  -95,123
  -103,016
  -111,224
  -119,756
Maintenance CAPEX, $m
  0
  -14
  -23
  -35
  -53
  -77
  -108
  -149
  -200
  -262
  -337
  -426
  -529
  -647
  -780
  -928
  -1,091
  -1,269
  -1,462
  -1,669
  -1,890
  -2,125
  -2,373
  -2,635
  -2,909
  -3,197
  -3,497
  -3,810
  -4,135
  -4,474
  -4,827
New CAPEX, $m
  -65
  -43
  -62
  -88
  -119
  -158
  -203
  -255
  -313
  -376
  -444
  -515
  -589
  -664
  -740
  -816
  -890
  -964
  -1,036
  -1,106
  -1,175
  -1,242
  -1,307
  -1,372
  -1,436
  -1,500
  -1,564
  -1,629
  -1,695
  -1,763
  -1,832
Cash from investing activities, $m
  143
  -57
  -85
  -123
  -172
  -235
  -311
  -404
  -513
  -638
  -781
  -941
  -1,118
  -1,311
  -1,520
  -1,744
  -1,981
  -2,233
  -2,498
  -2,775
  -3,065
  -3,367
  -3,680
  -4,007
  -4,345
  -4,697
  -5,061
  -5,439
  -5,830
  -6,237
  -6,659
Free cash flow, $m
  -165
  -530
  -824
  -1,240
  -1,806
  -2,557
  -3,526
  -4,746
  -6,247
  -8,055
  -10,194
  -12,682
  -15,530
  -18,747
  -22,336
  -26,296
  -30,624
  -35,314
  -40,357
  -45,747
  -51,474
  -57,531
  -63,913
  -70,612
  -77,627
  -84,956
  -92,600
  -100,562
  -108,846
  -117,461
  -126,415
Issuance/(repayment) of debt, $m
  150
  205
  299
  419
  571
  754
  971
  1,219
  1,497
  1,800
  2,125
  2,467
  2,820
  3,181
  3,544
  3,906
  4,264
  4,616
  4,960
  5,297
  5,625
  5,946
  6,261
  6,571
  6,879
  7,185
  7,492
  7,802
  8,118
  8,441
  8,773
Issuance/(repurchase) of shares, $m
  28
  723
  1,106
  1,635
  2,344
  3,268
  4,441
  5,895
  7,657
  9,752
  12,197
  15,006
  18,188
  21,744
  25,675
  29,977
  34,642
  39,663
  45,031
  50,738
  56,775
  63,135
  69,813
  76,805
  84,110
  91,727
  99,660
  107,914
  116,496
  125,415
  134,682
Cash from financing (excl. dividends), $m  
  178
  928
  1,405
  2,054
  2,915
  4,022
  5,412
  7,114
  9,154
  11,552
  14,322
  17,473
  21,008
  24,925
  29,219
  33,883
  38,906
  44,279
  49,991
  56,035
  62,400
  69,081
  76,074
  83,376
  90,989
  98,912
  107,152
  115,716
  124,614
  133,856
  143,455
Total cash flow (excl. dividends), $m
  13
  398
  580
  814
  1,109
  1,465
  1,886
  2,368
  2,907
  3,496
  4,128
  4,791
  5,478
  6,178
  6,883
  7,586
  8,282
  8,965
  9,635
  10,288
  10,926
  11,550
  12,162
  12,764
  13,361
  13,955
  14,552
  15,155
  15,767
  16,395
  17,040
Retained Cash Flow (-), $m
  345
  -723
  -1,106
  -1,635
  -2,344
  -3,268
  -4,441
  -5,895
  -7,657
  -9,752
  -12,197
  -15,006
  -18,188
  -21,744
  -25,675
  -29,977
  -34,642
  -39,663
  -45,031
  -50,738
  -56,775
  -63,135
  -69,813
  -76,805
  -84,110
  -91,727
  -99,660
  -107,914
  -116,496
  -125,415
  -134,682
Prev. year cash balance distribution, $m
 
  627
  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
 
  302
  -526
  -820
  -1,236
  -1,803
  -2,556
  -3,527
  -4,750
  -6,255
  -8,069
  -10,215
  -12,710
  -15,567
  -18,792
  -22,391
  -26,360
  -30,698
  -35,397
  -40,450
  -45,849
  -51,585
  -57,651
  -64,041
  -70,749
  -77,772
  -85,108
  -92,760
  -100,729
  -109,020
  -117,642
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
 
  290
  -481
  -714
  -1,017
  -1,398
  -1,855
  -2,383
  -2,969
  -3,593
  -4,230
  -4,851
  -5,424
  -5,919
  -6,309
  -6,574
  -6,699
  -6,679
  -6,519
  -6,228
  -5,826
  -5,336
  -4,784
  -4,197
  -3,603
  -3,025
  -2,483
  -1,991
  -1,558
  -1,190
  -886
Current shareholders' claim on cash, %
  100
  80.2
  64.9
  52.9
  43.5
  36.0
  30.0
  25.1
  21.2
  17.9
  15.2
  13.0
  11.1
  9.6
  8.2
  7.1
  6.2
  5.3
  4.6
  4.0
  3.5
  3.1
  2.7
  2.4
  2.1
  1.8
  1.6
  1.4
  1.2
  1.1
  1.0

Alnylam Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is engaged in the discovery, development and commercialization of ribonucleic acid (RNA) interference (RNAi) therapeutics. The Company is focused on the use of its N-acetylgalactosamine (GalNAc)-conjugate platform for delivery of small interfering RNAs (siRNAs). Its pipeline of investigational RNAi therapeutics focuses on three Strategic Therapeutic Areas (STArs): Genetic Medicines, with multiple product candidates for the treatment of rare diseases; Cardio-Metabolic Diseases, with product candidates directed toward genetically validated, liver-expressed disease targets for unmet needs in cardiovascular and metabolic diseases, and Hepatic Infectious Diseases, with product candidates designed to address the global health challenges of hepatic infectious diseases, beginning with hepatitis B and hepatitis D viral infections. The Company's lead product, Patisiran, is formulated utilizing lipid nanoparticles (LNPs).

FINANCIAL RATIOS  of  Alnylam Pharmaceuticals (ALNY)

Valuation Ratios
P/E Ratio -25.5
Price to Sales 222.9
Price to Book 11.4
Price to Tangible Book
Price to Cash Flow -34
Price to Free Cash Flow -28.1
Growth Rates
Sales Growth Rate 14.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 400%
Cap. Spend. - 3 Yr. Gr. Rate 74.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 16.3%
Total Debt to Equity 16.3%
Interest Coverage -409
Management Effectiveness
Return On Assets -30.9%
Ret/ On Assets - 3 Yr. Avg. -34.1%
Return On Total Capital -35.1%
Ret/ On T. Cap. - 3 Yr. Avg. -40.4%
Return On Equity -37.5%
Return On Equity - 3 Yr. Avg. -41.2%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -838.3%
EBITDA Margin - 3 Yr. Avg. -754%
Operating Margin -904.3%
Oper. Margin - 3 Yr. Avg. -806.8%
Pre-Tax Margin -872.3%
Pre-Tax Margin - 3 Yr. Avg. -788.6%
Net Profit Margin -872.3%
Net Profit Margin - 3 Yr. Avg. -761.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 3.4%
Payout Ratio 0%

ALNY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALNY stock intrinsic value calculation we used $47 million for the last fiscal year's total revenue generated by Alnylam Pharmaceuticals. The default revenue input number comes from 2016 income statement of Alnylam Pharmaceuticals. 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 ALNY stock valuation model: a) initial revenue growth rate of 60% 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 ALNY is calculated based on our internal credit rating of Alnylam Pharmaceuticals, 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 Alnylam Pharmaceuticals.
    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 ALNY stock the variable cost ratio is equal to 821.3%.

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 ALNY 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 Alnylam Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Alnylam Pharmaceuticals. 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 ALNY 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 ALNY are equal to 152.1%.

Life of production assets of 4.8 years is the average useful life of capital assets used in Alnylam Pharmaceuticals 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 ALNY is equal to -185.1%. 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 - $920 million for Alnylam Pharmaceuticals - 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 90.975 million for Alnylam Pharmaceuticals 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 Alnylam Pharmaceuticals at the current share price and the inputted number of shares is $11.1 billion.

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▶ After 10 months, Alnylam still can't explain patient trial deaths   [Aug-09-17 10:15PM  American City Business Journals]
▶ Alnylam reports 2Q loss   [09:22PM  Associated Press]
Financial statements of ALNY
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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