Intrinsic value of BioMarin Pharmaceutical - BMRN

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$97.06

  Intrinsic Value

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  Value-price divergence*

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$97.06

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

We calculate the intrinsic value of BMRN 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 17.2

 

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, %
  25.51
  31.60
  28.94
  26.55
  24.39
  22.45
  20.71
  19.14
  17.72
  16.45
  15.31
  14.27
  13.35
  12.51
  11.76
  11.09
  10.48
  9.93
  9.44
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
Revenue, $m
  1,117
  1,470
  1,895
  2,399
  2,984
  3,653
  4,410
  5,254
  6,185
  7,202
  8,305
  9,490
  10,757
  12,103
  13,526
  15,026
  16,600
  18,248
  19,970
  21,766
  23,637
  25,583
  27,607
  29,710
  31,896
  34,168
  36,528
  38,983
  41,535
  44,190
  46,953
Variable operating expenses, $m
 
  1,646
  2,117
  2,673
  3,321
  4,062
  4,899
  5,832
  6,863
  7,988
  9,208
  10,500
  11,901
  13,390
  14,965
  16,624
  18,366
  20,189
  22,094
  24,081
  26,151
  28,304
  30,543
  32,870
  35,289
  37,802
  40,414
  43,129
  45,952
  48,890
  51,947
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
  1,920
  1,646
  2,117
  2,673
  3,321
  4,062
  4,899
  5,832
  6,863
  7,988
  9,208
  10,500
  11,901
  13,390
  14,965
  16,624
  18,366
  20,189
  22,094
  24,081
  26,151
  28,304
  30,543
  32,870
  35,289
  37,802
  40,414
  43,129
  45,952
  48,890
  51,947
Operating income, $m
  -803
  -176
  -221
  -275
  -337
  -408
  -489
  -579
  -678
  -786
  -903
  -1,009
  -1,144
  -1,287
  -1,439
  -1,598
  -1,766
  -1,941
  -2,124
  -2,315
  -2,514
  -2,721
  -2,936
  -3,160
  -3,393
  -3,634
  -3,885
  -4,146
  -4,418
  -4,700
  -4,994
EBITDA, $m
  -706
  -45
  -58
  -74
  -92
  -112
  -135
  -161
  -190
  -221
  -255
  -291
  -330
  -371
  -415
  -461
  -509
  -560
  -613
  -668
  -725
  -785
  -847
  -912
  -979
  -1,048
  -1,121
  -1,196
  -1,274
  -1,356
  -1,441
Interest expense (income), $m
  9
  23
  37
  53
  73
  95
  121
  151
  183
  220
  259
  302
  348
  397
  449
  504
  562
  623
  687
  754
  823
  896
  971
  1,050
  1,131
  1,216
  1,304
  1,395
  1,491
  1,589
  1,692
Earnings before tax, $m
  -831
  -199
  -258
  -328
  -410
  -504
  -610
  -729
  -861
  -1,005
  -1,162
  -1,311
  -1,492
  -1,684
  -1,888
  -2,102
  -2,328
  -2,564
  -2,811
  -3,069
  -3,337
  -3,617
  -3,908
  -4,210
  -4,524
  -4,850
  -5,189
  -5,542
  -5,908
  -6,290
  -6,686
Tax expense, $m
  -201
  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
  -630
  -199
  -258
  -328
  -410
  -504
  -610
  -729
  -861
  -1,005
  -1,162
  -1,311
  -1,492
  -1,684
  -1,888
  -2,102
  -2,328
  -2,564
  -2,811
  -3,069
  -3,337
  -3,617
  -3,908
  -4,210
  -4,524
  -4,850
  -5,189
  -5,542
  -5,908
  -6,290
  -6,686

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  790
  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
  4,024
  4,261
  5,494
  6,952
  8,648
  10,590
  12,782
  15,229
  17,928
  20,877
  24,072
  27,508
  31,180
  35,081
  39,207
  43,553
  48,116
  52,894
  57,885
  63,090
  68,512
  74,153
  80,019
  86,116
  92,452
  99,036
  105,879
  112,993
  120,390
  128,086
  136,095
Adjusted assets (=assets-cash), $m
  3,234
  4,261
  5,494
  6,952
  8,648
  10,590
  12,782
  15,229
  17,928
  20,877
  24,072
  27,508
  31,180
  35,081
  39,207
  43,553
  48,116
  52,894
  57,885
  63,090
  68,512
  74,153
  80,019
  86,116
  92,452
  99,036
  105,879
  112,993
  120,390
  128,086
  136,095
Revenue / Adjusted assets
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
Average production assets, $m
  1,370
  1,802
  2,324
  2,941
  3,658
  4,479
  5,407
  6,441
  7,583
  8,830
  10,182
  11,635
  13,188
  14,838
  16,583
  18,422
  20,352
  22,373
  24,484
  26,685
  28,978
  31,365
  33,846
  36,424
  39,104
  41,889
  44,784
  47,793
  50,922
  54,176
  57,564
Working capital, $m
  983
  282
  364
  461
  573
  701
  847
  1,009
  1,188
  1,383
  1,595
  1,822
  2,065
  2,324
  2,597
  2,885
  3,187
  3,504
  3,834
  4,179
  4,538
  4,912
  5,300
  5,704
  6,124
  6,560
  7,013
  7,485
  7,975
  8,484
  9,015
Total debt, $m
  683
  1,053
  1,524
  2,081
  2,729
  3,470
  4,308
  5,242
  6,273
  7,400
  8,620
  9,933
  11,336
  12,826
  14,402
  16,062
  17,805
  19,630
  21,537
  23,526
  25,597
  27,751
  29,992
  32,321
  34,742
  37,257
  39,871
  42,588
  45,414
  48,354
  51,413
Total liabilities, $m
  1,257
  1,628
  2,099
  2,656
  3,304
  4,045
  4,883
  5,817
  6,848
  7,975
  9,195
  10,508
  11,911
  13,401
  14,977
  16,637
  18,380
  20,205
  22,112
  24,101
  26,172
  28,326
  30,567
  32,896
  35,317
  37,832
  40,446
  43,163
  45,989
  48,929
  51,988
Total equity, $m
  2,766
  2,633
  3,395
  4,296
  5,344
  6,544
  7,900
  9,411
  11,079
  12,902
  14,876
  17,000
  19,269
  21,680
  24,230
  26,916
  29,736
  32,688
  35,773
  38,990
  42,340
  45,827
  49,452
  53,220
  57,135
  61,204
  65,433
  69,830
  74,401
  79,157
  84,107
Total liabilities and equity, $m
  4,023
  4,261
  5,494
  6,952
  8,648
  10,589
  12,783
  15,228
  17,927
  20,877
  24,071
  27,508
  31,180
  35,081
  39,207
  43,553
  48,116
  52,893
  57,885
  63,091
  68,512
  74,153
  80,019
  86,116
  92,452
  99,036
  105,879
  112,993
  120,390
  128,086
  136,095
Debt-to-equity ratio
  0.247
  0.400
  0.450
  0.480
  0.510
  0.530
  0.550
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
  0.590
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
Adjusted equity ratio
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -630
  -199
  -258
  -328
  -410
  -504
  -610
  -729
  -861
  -1,005
  -1,162
  -1,311
  -1,492
  -1,684
  -1,888
  -2,102
  -2,328
  -2,564
  -2,811
  -3,069
  -3,337
  -3,617
  -3,908
  -4,210
  -4,524
  -4,850
  -5,189
  -5,542
  -5,908
  -6,290
  -6,686
Depreciation, amort., depletion, $m
  97
  131
  163
  201
  245
  296
  353
  417
  488
  565
  648
  718
  814
  916
  1,024
  1,137
  1,256
  1,381
  1,511
  1,647
  1,789
  1,936
  2,089
  2,248
  2,414
  2,586
  2,764
  2,950
  3,143
  3,344
  3,553
Funds from operations, $m
  -388
  -68
  -95
  -127
  -164
  -208
  -257
  -312
  -373
  -441
  -514
  -593
  -678
  -768
  -864
  -965
  -1,072
  -1,183
  -1,300
  -1,422
  -1,549
  -1,681
  -1,818
  -1,961
  -2,110
  -2,264
  -2,425
  -2,592
  -2,765
  -2,945
  -3,133
Change in working capital, $m
  -160
  68
  82
  97
  112
  129
  145
  162
  179
  195
  212
  228
  243
  258
  273
  288
  302
  316
  331
  345
  359
  374
  389
  404
  420
  436
  453
  471
  490
  510
  531
Cash from operations, $m
  -228
  -154
  -177
  -224
  -277
  -336
  -402
  -474
  -552
  -636
  -725
  -821
  -921
  -1,027
  -1,137
  -1,253
  -1,374
  -1,500
  -1,630
  -1,766
  -1,908
  -2,055
  -2,207
  -2,365
  -2,530
  -2,701
  -2,878
  -3,063
  -3,255
  -3,455
  -3,664
Maintenance CAPEX, $m
  0
  -85
  -111
  -143
  -182
  -226
  -276
  -334
  -398
  -468
  -545
  -629
  -718
  -814
  -916
  -1,024
  -1,137
  -1,256
  -1,381
  -1,511
  -1,647
  -1,789
  -1,936
  -2,089
  -2,248
  -2,414
  -2,586
  -2,764
  -2,950
  -3,143
  -3,344
New CAPEX, $m
  -148
  -432
  -522
  -617
  -717
  -821
  -927
  -1,035
  -1,142
  -1,247
  -1,351
  -1,453
  -1,553
  -1,650
  -1,745
  -1,838
  -1,930
  -2,021
  -2,111
  -2,202
  -2,293
  -2,386
  -2,481
  -2,579
  -2,680
  -2,785
  -2,894
  -3,009
  -3,129
  -3,255
  -3,388
Cash from investing activities, $m
  -484
  -517
  -633
  -760
  -899
  -1,047
  -1,203
  -1,369
  -1,540
  -1,715
  -1,896
  -2,082
  -2,271
  -2,464
  -2,661
  -2,862
  -3,067
  -3,277
  -3,492
  -3,713
  -3,940
  -4,175
  -4,417
  -4,668
  -4,928
  -5,199
  -5,480
  -5,773
  -6,079
  -6,398
  -6,732
Free cash flow, $m
  -712
  -671
  -809
  -984
  -1,175
  -1,383
  -1,606
  -1,842
  -2,091
  -2,351
  -2,622
  -2,902
  -3,192
  -3,491
  -3,798
  -4,115
  -4,441
  -4,777
  -5,123
  -5,480
  -5,848
  -6,229
  -6,624
  -7,033
  -7,458
  -7,899
  -8,358
  -8,836
  -9,334
  -9,853
  -10,395
Issuance/(repayment) of debt, $m
  0
  392
  471
  557
  648
  742
  838
  934
  1,031
  1,127
  1,221
  1,313
  1,403
  1,490
  1,576
  1,660
  1,743
  1,825
  1,907
  1,988
  2,071
  2,155
  2,241
  2,329
  2,420
  2,515
  2,614
  2,717
  2,826
  2,940
  3,059
Issuance/(repurchase) of shares, $m
  787
  146
  1,100
  1,328
  1,576
  1,842
  2,124
  2,420
  2,728
  3,047
  3,376
  3,713
  4,059
  4,412
  4,772
  5,141
  5,518
  5,904
  6,300
  6,708
  7,128
  7,561
  8,008
  8,472
  8,953
  9,453
  9,973
  10,515
  11,080
  11,670
  12,286
Cash from financing (excl. dividends), $m  
  727
  538
  1,571
  1,885
  2,224
  2,584
  2,962
  3,354
  3,759
  4,174
  4,597
  5,026
  5,462
  5,902
  6,348
  6,801
  7,261
  7,729
  8,207
  8,696
  9,199
  9,716
  10,249
  10,801
  11,373
  11,968
  12,587
  13,232
  13,906
  14,610
  15,345
Total cash flow (excl. dividends), $m
  11
  -279
  -338
  -427
  -528
  -642
  -768
  -908
  -1,060
  -1,225
  -1,401
  -1,590
  -1,790
  -2,000
  -2,222
  -2,455
  -2,698
  -2,952
  -3,216
  -3,491
  -3,777
  -4,074
  -4,383
  -4,704
  -5,038
  -5,384
  -5,744
  -6,119
  -6,508
  -6,914
  -7,336
Retained Cash Flow (-), $m
  -365
  -635
  -762
  -901
  -1,048
  -1,200
  -1,355
  -1,512
  -1,668
  -1,823
  -1,975
  -2,124
  -2,269
  -2,411
  -2,550
  -2,686
  -2,820
  -2,952
  -3,085
  -3,217
  -3,350
  -3,486
  -3,625
  -3,768
  -3,916
  -4,069
  -4,229
  -4,396
  -4,572
  -4,756
  -4,950
Prev. year cash balance distribution, $m
 
  768
  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
 
  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
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
 
  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
Current shareholders' claim on cash, %
  100
  98.8
  92.6
  87.1
  82.3
  77.9
  74.1
  70.6
  67.4
  64.6
  62.0
  59.6
  57.4
  55.3
  53.4
  51.7
  50.0
  48.5
  47.0
  45.6
  44.3
  43.1
  41.9
  40.8
  39.7
  38.7
  37.7
  36.7
  35.8
  34.9
  34.1

BioMarin Pharmaceutical Inc. develops and commercializes pharmaceuticals for serious diseases and medical conditions in the United States, Europe, Latin America, and internationally. Its commercial products include Vimizim, an enzyme replacement therapy for the treatment of MPS IV A, a lysosomal storage disorder; Naglazyme, a recombinant form of N-acetylgalactosamine 4-sulfatase for patients with mucopolysaccharidosis VI; Kuvan, a proprietary synthetic oral form of 6R-BH4 used to treat patients with phenylketonuria (PKU), an inherited metabolic disease; Aldurazyme used for the treatment of patients with mucopolysaccharidosis I, a genetic disease; and Firdapse, a form of 3,4-diaminopyridine used for the treatment of Lambert Myasthenic Syndrome, an autoimmune disease. The company also conducts clinical trials on several investigational product candidates for the treatment of various diseases, including Kyndrisa, an exon-51 skipping compound for the treatment of Duchenne muscular dystrophy (DMD); pegvaliase, an enzyme substitution therapy for the treatment of PKU; reveglucosidase alfa, an enzyme replacement therapy for Pompe disease; vosoritide, a peptide therapeutic for the treatment of achondroplasia; BMN 044, BMN 045, and BMN 053 for DMD treatment; cerliponase alfa for the treatment of late infantile neuronal ceroid lipofuscinosis; and BMN 270, an AAV VIII vector and Factor VIII gene therapy drug development candidate for the treatment of hemophilia A. In addition, it develops preclinical product candidates for genetic and other metabolic diseases, such as alpha-N-acetyglucosaminidase. The company serves specialty pharmacies and end-users, such as hospitals and foreign government agencies; and distributors and pharmaceutical wholesalers. BioMarin Pharmaceutical Inc. has a collaboration agreement with Genzyme Corporation. The company was founded in 1996 and is headquartered in San Rafael, California.

FINANCIAL RATIOS  of  BioMarin Pharmaceutical (BMRN)

Valuation Ratios
P/E Ratio -26.6
Price to Sales 15
Price to Book 6.1
Price to Tangible Book
Price to Cash Flow -73.5
Price to Free Cash Flow -44.6
Growth Rates
Sales Growth Rate 25.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35.1%
Cap. Spend. - 3 Yr. Gr. Rate 17.9%
Financial Strength
Quick Ratio 36
Current Ratio 0.1
LT Debt to Equity 23.9%
Total Debt to Equity 24.7%
Interest Coverage -91
Management Effectiveness
Return On Assets -16.1%
Ret/ On Assets - 3 Yr. Avg. -8.9%
Return On Total Capital -19.3%
Ret/ On T. Cap. - 3 Yr. Avg. -10.8%
Return On Equity -24.4%
Return On Equity - 3 Yr. Avg. -14.2%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 81.2%
Gross Margin - 3 Yr. Avg. 82.6%
EBITDA Margin -64.9%
EBITDA Margin - 3 Yr. Avg. -28.5%
Operating Margin -71.9%
Oper. Margin - 3 Yr. Avg. -32.3%
Pre-Tax Margin -74.4%
Pre-Tax Margin - 3 Yr. Avg. -36.2%
Net Profit Margin -56.4%
Net Profit Margin - 3 Yr. Avg. -31.2%
Effective Tax Rate 24.2%
Eff/ Tax Rate - 3 Yr. Avg. 2%
Payout Ratio 0%

BMRN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BMRN stock intrinsic value calculation we used $1117 million for the last fiscal year's total revenue generated by BioMarin Pharmaceutical. The default revenue input number comes from 2016 income statement of BioMarin Pharmaceutical. 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 BMRN stock valuation model: a) initial revenue growth rate of 31.6% 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 BMRN is calculated based on our internal credit rating of BioMarin Pharmaceutical, 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 BioMarin Pharmaceutical.
    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 BMRN stock the variable cost ratio is equal to 112.4%.

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 BMRN 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 BioMarin Pharmaceutical.

Corporate tax rate of 27% is the nominal tax rate for BioMarin Pharmaceutical. 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 BMRN 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 BMRN are equal to 122.6%.

Life of production assets of 16.2 years is the average useful life of capital assets used in BioMarin Pharmaceutical 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 BMRN is equal to 19.2%. 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 - $2766 million for BioMarin Pharmaceutical - 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 176.953 million for BioMarin Pharmaceutical 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 BioMarin Pharmaceutical at the current share price and the inputted number of shares is $17.2 billion.


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COMPANY NEWS

▶ BioMarin (BMRN) in Focus: Stock Moves 7% Higher   [Jun-22-17 08:37AM  Zacks]
▶ BioMarin to Attend Upcoming Investor Conference   [May-31-17 06:00AM  PR Newswire]
▶ Why Sangamo Therapeutics Inc. Jumped Higher Today   [May-12-17 04:20PM  Motley Fool]
▶ BioMarin Pharmaceutical Inc. Moves Toward Profitability   [May-09-17 01:40PM  Motley Fool]
▶ BioMarin: Is Profitability On The Horizon?   [May-08-17 02:57PM  Barrons.com]
▶ These Biotechs Are Grabbing Bullish Views In Wake Of Earnings   [May-05-17 04:27PM  Investor's Business Daily]
▶ BioMarin reports 1Q loss   [May-04-17 04:46PM  Associated Press]
▶ BioMarin to Attend Two Upcoming Investor Conferences   [May-02-17 08:30AM  PR Newswire]
▶ The Hot Stock: Alexion Pharmaceuticals Climbs 3.3%   [Apr-13-17 04:18PM  Barrons.com]
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▶ Catalyst Pharmaceuticals Inc (CPRX): Heres Whats Next   [Mar-16-17 12:03PM  Insider Monkey]
▶ BioMarin Pharmaceutical Inc. Logs a Combined Blockbuster   [Feb-25-17 11:42AM  at Motley Fool]
▶ 3 Biotech Stocks You May Be Overlooking   [Feb-22-17 03:53PM  at Motley Fool]
▶ JANA Partners Made Massive New Pharma Investments in Q4   [Feb-21-17 02:07PM  at Investopedia]
▶ Gilead Sciences & Bristol Myers: Two Wrongs Make a Right?   [Feb-08-17 10:17AM  at Barrons.com]
Stock chart of BMRN Financial statements of BMRN Annual reports of BMRN
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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