Intrinsic value of Alexion Pharmaceuticals - ALXN

Previous Close

$113.60

  Intrinsic Value

$29.44

stock screener

  Rating & Target

str. sell

-74%

Previous close

$113.60

 
Intrinsic value

$29.44

 
Up/down potential

-74%

 
Rating

str. sell

We calculate the intrinsic value of ALXN 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 25.4

 

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, %
  18.43
  18.40
  17.06
  15.85
  14.77
  13.79
  12.91
  12.12
  11.41
  10.77
  10.19
  9.67
  9.21
  8.78
  8.41
  8.07
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
  5.78
  5.70
  5.63
Revenue, $m
  3,084
  3,651
  4,274
  4,952
  5,683
  6,467
  7,302
  8,187
  9,122
  10,104
  11,134
  12,210
  13,334
  14,506
  15,725
  16,993
  18,312
  19,682
  21,106
  22,586
  24,124
  25,723
  27,387
  29,117
  30,919
  32,796
  34,751
  36,789
  38,915
  41,134
  43,450
Variable operating expenses, $m
 
  2,569
  2,922
  3,305
  3,719
  4,162
  4,634
  5,135
  5,664
  6,219
  6,802
  6,907
  7,543
  8,206
  8,895
  9,613
  10,359
  11,134
  11,939
  12,776
  13,646
  14,551
  15,492
  16,471
  17,490
  18,552
  19,658
  20,811
  22,013
  23,268
  24,579
Fixed operating expenses, $m
 
  176
  181
  185
  190
  195
  199
  204
  210
  215
  220
  226
  231
  237
  243
  249
  255
  262
  268
  275
  282
  289
  296
  304
  311
  319
  327
  335
  343
  352
  361
Total operating expenses, $m
  2,417
  2,745
  3,103
  3,490
  3,909
  4,357
  4,833
  5,339
  5,874
  6,434
  7,022
  7,133
  7,774
  8,443
  9,138
  9,862
  10,614
  11,396
  12,207
  13,051
  13,928
  14,840
  15,788
  16,775
  17,801
  18,871
  19,985
  21,146
  22,356
  23,620
  24,940
Operating income, $m
  667
  906
  1,172
  1,462
  1,775
  2,111
  2,468
  2,848
  3,248
  3,670
  4,112
  5,078
  5,560
  6,063
  6,587
  7,132
  7,698
  8,287
  8,899
  9,535
  10,196
  10,883
  11,599
  12,343
  13,118
  13,925
  14,766
  15,644
  16,559
  17,514
  18,511
EBITDA, $m
  1,063
  1,644
  1,950
  2,283
  2,643
  3,029
  3,440
  3,877
  4,337
  4,822
  5,329
  5,861
  6,415
  6,993
  7,595
  8,221
  8,872
  9,549
  10,252
  10,983
  11,743
  12,533
  13,355
  14,210
  15,101
  16,028
  16,995
  18,003
  19,054
  20,152
  21,298
Interest expense (income), $m
  80
  101
  129
  160
  194
  230
  269
  311
  355
  401
  450
  502
  555
  611
  670
  730
  793
  859
  927
  998
  1,072
  1,148
  1,228
  1,311
  1,397
  1,487
  1,580
  1,677
  1,779
  1,885
  1,995
Earnings before tax, $m
  576
  805
  1,043
  1,302
  1,581
  1,880
  2,199
  2,537
  2,894
  3,268
  3,661
  4,576
  5,005
  5,452
  5,917
  6,401
  6,905
  7,428
  7,971
  8,537
  9,124
  9,735
  10,371
  11,032
  11,721
  12,438
  13,186
  13,966
  14,780
  15,629
  16,516
Tax expense, $m
  177
  217
  282
  351
  427
  508
  594
  685
  781
  882
  989
  1,236
  1,351
  1,472
  1,598
  1,728
  1,864
  2,005
  2,152
  2,305
  2,464
  2,628
  2,800
  2,979
  3,165
  3,358
  3,560
  3,771
  3,990
  4,220
  4,459
Net income, $m
  399
  588
  761
  950
  1,154
  1,373
  1,605
  1,852
  2,112
  2,386
  2,673
  3,340
  3,654
  3,980
  4,320
  4,673
  5,040
  5,422
  5,819
  6,232
  6,661
  7,107
  7,571
  8,053
  8,556
  9,080
  9,626
  10,195
  10,789
  11,409
  12,056

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,293
  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
  13,253
  14,153
  16,567
  19,194
  22,029
  25,067
  28,304
  31,734
  35,355
  39,162
  43,153
  47,327
  51,684
  56,224
  60,950
  65,866
  70,977
  76,288
  81,807
  87,543
  93,505
  99,703
  106,150
  112,858
  119,842
  127,115
  134,693
  142,594
  150,835
  159,434
  168,412
Adjusted assets (=assets-cash), $m
  11,960
  14,153
  16,567
  19,194
  22,029
  25,067
  28,304
  31,734
  35,355
  39,162
  43,153
  47,327
  51,684
  56,224
  60,950
  65,866
  70,977
  76,288
  81,807
  87,543
  93,505
  99,703
  106,150
  112,858
  119,842
  127,115
  134,693
  142,594
  150,835
  159,434
  168,412
Revenue / Adjusted assets
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
Average production assets, $m
  5,024
  5,948
  6,963
  8,067
  9,258
  10,535
  11,896
  13,337
  14,859
  16,459
  18,137
  19,891
  21,722
  23,630
  25,616
  27,682
  29,830
  32,062
  34,382
  36,793
  39,298
  41,903
  44,613
  47,432
  50,367
  53,424
  56,609
  59,930
  63,393
  67,007
  70,781
Working capital, $m
  1,755
  745
  872
  1,010
  1,159
  1,319
  1,490
  1,670
  1,861
  2,061
  2,271
  2,491
  2,720
  2,959
  3,208
  3,467
  3,736
  4,015
  4,306
  4,608
  4,921
  5,248
  5,587
  5,940
  6,308
  6,690
  7,089
  7,505
  7,939
  8,391
  8,864
Total debt, $m
  3,055
  3,690
  4,576
  5,540
  6,581
  7,696
  8,883
  10,143
  11,471
  12,869
  14,333
  15,865
  17,464
  19,130
  20,865
  22,669
  24,544
  26,494
  28,519
  30,624
  32,812
  35,087
  37,453
  39,915
  42,478
  45,147
  47,928
  50,828
  53,852
  57,008
  60,303
Total liabilities, $m
  4,559
  5,194
  6,080
  7,044
  8,085
  9,200
  10,387
  11,647
  12,975
  14,373
  15,837
  17,369
  18,968
  20,634
  22,369
  24,173
  26,048
  27,998
  30,023
  32,128
  34,316
  36,591
  38,957
  41,419
  43,982
  46,651
  49,432
  52,332
  55,356
  58,512
  61,807
Total equity, $m
  8,694
  8,959
  10,487
  12,150
  13,944
  15,867
  17,916
  20,088
  22,380
  24,790
  27,316
  29,958
  32,716
  35,590
  38,581
  41,693
  44,928
  48,290
  51,784
  55,415
  59,188
  63,112
  67,193
  71,439
  75,860
  80,464
  85,261
  90,262
  95,478
  100,922
  106,605
Total liabilities and equity, $m
  13,253
  14,153
  16,567
  19,194
  22,029
  25,067
  28,303
  31,735
  35,355
  39,163
  43,153
  47,327
  51,684
  56,224
  60,950
  65,866
  70,976
  76,288
  81,807
  87,543
  93,504
  99,703
  106,150
  112,858
  119,842
  127,115
  134,693
  142,594
  150,834
  159,434
  168,412
Debt-to-equity ratio
  0.351
  0.410
  0.440
  0.460
  0.470
  0.480
  0.500
  0.500
  0.510
  0.520
  0.520
  0.530
  0.530
  0.540
  0.540
  0.540
  0.550
  0.550
  0.550
  0.550
  0.550
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.570
Adjusted equity ratio
  0.619
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633
  0.633

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  399
  588
  761
  950
  1,154
  1,373
  1,605
  1,852
  2,112
  2,386
  2,673
  3,340
  3,654
  3,980
  4,320
  4,673
  5,040
  5,422
  5,819
  6,232
  6,661
  7,107
  7,571
  8,053
  8,556
  9,080
  9,626
  10,195
  10,789
  11,409
  12,056
Depreciation, amort., depletion, $m
  396
  738
  778
  821
  868
  918
  972
  1,029
  1,089
  1,152
  1,218
  783
  855
  930
  1,009
  1,090
  1,174
  1,262
  1,354
  1,449
  1,547
  1,650
  1,756
  1,867
  1,983
  2,103
  2,229
  2,359
  2,496
  2,638
  2,787
Funds from operations, $m
  950
  1,325
  1,539
  1,772
  2,022
  2,291
  2,577
  2,881
  3,201
  3,538
  3,891
  4,124
  4,509
  4,910
  5,328
  5,763
  6,215
  6,685
  7,173
  7,680
  8,208
  8,756
  9,327
  9,921
  10,539
  11,183
  11,855
  12,555
  13,285
  14,047
  14,843
Change in working capital, $m
  -136
  116
  127
  138
  149
  160
  170
  181
  191
  200
  210
  220
  229
  239
  249
  259
  269
  280
  290
  302
  314
  326
  339
  353
  368
  383
  399
  416
  434
  453
  473
Cash from operations, $m
  1,086
  1,210
  1,412
  1,633
  1,873
  2,131
  2,407
  2,700
  3,010
  3,337
  3,680
  3,904
  4,279
  4,671
  5,079
  5,504
  5,946
  6,405
  6,882
  7,378
  7,894
  8,430
  8,988
  9,568
  10,172
  10,801
  11,456
  12,139
  12,851
  13,595
  14,370
Maintenance CAPEX, $m
  0
  -198
  -234
  -274
  -318
  -364
  -415
  -468
  -525
  -585
  -648
  -714
  -783
  -855
  -930
  -1,009
  -1,090
  -1,174
  -1,262
  -1,354
  -1,449
  -1,547
  -1,650
  -1,756
  -1,867
  -1,983
  -2,103
  -2,229
  -2,359
  -2,496
  -2,638
New CAPEX, $m
  -333
  -925
  -1,015
  -1,104
  -1,191
  -1,277
  -1,360
  -1,442
  -1,522
  -1,600
  -1,677
  -1,754
  -1,831
  -1,908
  -1,986
  -2,066
  -2,148
  -2,232
  -2,320
  -2,411
  -2,506
  -2,605
  -2,710
  -2,819
  -2,935
  -3,057
  -3,185
  -3,321
  -3,463
  -3,614
  -3,773
Cash from investing activities, $m
  -287
  -1,123
  -1,249
  -1,378
  -1,509
  -1,641
  -1,775
  -1,910
  -2,047
  -2,185
  -2,325
  -2,468
  -2,614
  -2,763
  -2,916
  -3,075
  -3,238
  -3,406
  -3,582
  -3,765
  -3,955
  -4,152
  -4,360
  -4,575
  -4,802
  -5,040
  -5,288
  -5,550
  -5,822
  -6,110
  -6,411
Free cash flow, $m
  799
  87
  163
  255
  364
  490
  632
  790
  964
  1,152
  1,355
  1,436
  1,665
  1,908
  2,163
  2,430
  2,708
  2,998
  3,300
  3,614
  3,940
  4,278
  4,628
  4,992
  5,369
  5,761
  6,167
  6,590
  7,028
  7,484
  7,959
Issuance/(repayment) of debt, $m
  -375
  802
  886
  964
  1,040
  1,115
  1,188
  1,259
  1,329
  1,397
  1,465
  1,532
  1,599
  1,666
  1,735
  1,804
  1,876
  1,949
  2,026
  2,105
  2,188
  2,275
  2,366
  2,462
  2,563
  2,669
  2,781
  2,900
  3,024
  3,156
  3,295
Issuance/(repurchase) of shares, $m
  -393
  803
  767
  712
  640
  551
  444
  320
  180
  24
  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  
  -836
  1,605
  1,653
  1,676
  1,680
  1,666
  1,632
  1,579
  1,509
  1,421
  1,465
  1,532
  1,599
  1,666
  1,735
  1,804
  1,876
  1,949
  2,026
  2,105
  2,188
  2,275
  2,366
  2,462
  2,563
  2,669
  2,781
  2,900
  3,024
  3,156
  3,295
Total cash flow (excl. dividends), $m
  -44
  1,693
  1,816
  1,932
  2,045
  2,155
  2,263
  2,369
  2,472
  2,573
  2,820
  2,967
  3,264
  3,574
  3,897
  4,234
  4,584
  4,948
  5,326
  5,719
  6,128
  6,553
  6,994
  7,454
  7,932
  8,430
  8,949
  9,489
  10,053
  10,641
  11,254
Retained Cash Flow (-), $m
  -435
  -1,391
  -1,528
  -1,663
  -1,794
  -1,923
  -2,049
  -2,172
  -2,292
  -2,410
  -2,526
  -2,642
  -2,758
  -2,874
  -2,992
  -3,112
  -3,235
  -3,362
  -3,494
  -3,631
  -3,774
  -3,924
  -4,081
  -4,246
  -4,420
  -4,604
  -4,797
  -5,001
  -5,216
  -5,443
  -5,683
Prev. year cash balance distribution, $m
 
  1,126
  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
 
  1,428
  288
  269
  250
  232
  214
  197
  180
  163
  293
  325
  507
  700
  906
  1,122
  1,349
  1,586
  1,832
  2,088
  2,354
  2,629
  2,913
  3,208
  3,512
  3,826
  4,151
  4,488
  4,836
  5,197
  5,571
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
 
  1,369
  264
  234
  206
  180
  156
  133
  113
  94
  154
  155
  216
  266
  304
  329
  343
  345
  337
  322
  299
  272
  242
  210
  179
  149
  121
  96
  75
  57
  42
Current shareholders' claim on cash, %
  100
  96.5
  93.7
  91.6
  90.0
  88.8
  87.9
  87.4
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1
  87.1

Alexion Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on the development and commercialization of therapeutic products. The Company's products include Soliris (eculizumab), Strensiq (asfotase alfa) and Kanuma (sebelipase alfa). The Company's clinical development programs include Soliris (eculizumab), cPMP (ALXN1101), SBC-103, ALXN1210 (IV) and ALXN1210 (Subcutaneous). Its Soliris is the therapeutic approved for patients with either paroxysmal nocturnal hemoglobinuria (PNH) or hemolytic uremic syndrome (aHUS). PNH and aHUS result from chronic uncontrolled activation of the complement component of the immune system. Its Strensiq is for the treatment of patients with Hypophosphatasia (HPP). Its product, Kanuma is for the treatment of patients with Lysosomal Acid Lipase Deficiency (LAL-D). It is a recombinant form of the human LAL enzyme, which is a replacement therapy that is approved for the treatment for patients with LAL-D.

FINANCIAL RATIOS  of  Alexion Pharmaceuticals (ALXN)

Valuation Ratios
P/E Ratio 63.8
Price to Sales 8.3
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 23.4
Price to Free Cash Flow 33.8
Growth Rates
Sales Growth Rate 18.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.4%
Cap. Spend. - 3 Yr. Gr. Rate 62.9%
Financial Strength
Quick Ratio 8
Current Ratio 0.1
LT Debt to Equity 33.2%
Total Debt to Equity 35.1%
Interest Coverage 8
Management Effectiveness
Return On Assets 3.4%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 9.3%
Return On Equity 4.7%
Return On Equity - 3 Yr. Avg. 10.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 91.6%
Gross Margin - 3 Yr. Avg. 91.6%
EBITDA Margin 34.1%
EBITDA Margin - 3 Yr. Avg. 34.2%
Operating Margin 21.6%
Oper. Margin - 3 Yr. Avg. 27%
Pre-Tax Margin 18.7%
Pre-Tax Margin - 3 Yr. Avg. 25.6%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 16%
Effective Tax Rate 30.7%
Eff/ Tax Rate - 3 Yr. Avg. 42.2%
Payout Ratio 0%

ALXN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALXN stock intrinsic value calculation we used $3084 million for the last fiscal year's total revenue generated by Alexion Pharmaceuticals. The default revenue input number comes from 2016 income statement of Alexion 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 ALXN stock valuation model: a) initial revenue growth rate of 18.4% 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 ALXN is calculated based on our internal credit rating of Alexion 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 Alexion 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 ALXN stock the variable cost ratio is equal to 72.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $172 million in the base year in the intrinsic value calculation for ALXN 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 Alexion Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Alexion 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 ALXN 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 ALXN are equal to 162.9%.

Life of production assets of 25.4 years is the average useful life of capital assets used in Alexion 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 ALXN is equal to 20.4%. 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 - $8694 million for Alexion 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 223.205 million for Alexion 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 Alexion Pharmaceuticals at the current share price and the inputted number of shares is $25.4 billion.

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COMPANY NEWS

▶ Elliott Management seeks changes at Alexion - NYT   [Dec-08-17 04:46PM  Reuters]
▶ Why This Biotech Could See 30% Upside In The Second Quarter   [04:09PM  Investor's Business Daily]
▶ 5 Cheap Biotech Stocks to Snag on the Bounce   [01:59PM  InvestorPlace]
▶ Boston-bound Alexion sees shares jump amid reported activist pressure   [11:30AM  American City Business Journals]
▶ Why Alexion Pharmacteuicals Sank 8.9% in November   [Dec-05-17 01:22PM  Motley Fool]
▶ Why Ra Pharmaceuticals, Inc. Got Hammered Today   [Dec-04-17 04:54PM  Motley Fool]
▶ Oppenheimer's Top Stock Picks For December   [Nov-30-17 10:17AM  Benzinga]
▶ Alexion Suffers Quantitative Downgrade, Bearish Charts   [Nov-13-17 03:05PM  TheStreet.com]
▶ 3 ETFs to Watch on Biotech Earnings   [Oct-29-17 03:04PM  Zacks]
▶ Analysts Recommendations for Biogen in October 2017   [Oct-27-17 09:03AM  Market Realist]
▶ Celgene Results Called 'Alarming,' As Alexion, Bristol Mixed   [04:03PM  Investor's Business Daily]
▶ Celgene Results Called 'Alarming,' As Alexion, Bristol Mixed   [11:35AM  Investor's Business Daily]
▶ Alexion beats 3Q profit forecasts   [06:53AM  Associated Press]
▶ Alexion Reports Third Quarter 2017 Results   [06:30AM  Business Wire]
▶ Alexion Rises On 'Best-Case Scenario' FDA Approval For Muscle Disease   [Oct-24-17 05:18PM  Investor's Business Daily]
▶ Alexion: How Do You Spell Relief?   [01:00PM  Barrons.com]
▶ Dow Bolts Higher On Q3 Reports; CAT, Polaris, GM And 3M Rally   [09:35AM  Investor's Business Daily]
▶ Is It Too Late To Buy Facebook?   [12:01PM  Investor's Business Daily]
▶ Alexion Pharmaceuticals Trying To Close In On Key Technical Measure   [Oct-11-17 03:00AM  Investor's Business Daily]
▶ How Strensiq Could Boost Alexions Long-Term Growth   [Oct-05-17 07:39AM  Market Realist]
▶ Gauging Alexions 2018 Growth with Soliris   [Oct-04-17 10:39AM  Market Realist]
Financial statements of ALXN
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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