Intrinsic value of Blueprint Medicines - BPMC

Previous Close

$42.37

  Intrinsic Value

$1.68

stock screener

  Rating & Target

str. sell

-96%

  Value-price divergence*

0%

Previous close

$42.37

 
Intrinsic value

$1.68

 
Up/down potential

-96%

 
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 BPMC 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 1.3

 

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, %
  154.55
  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
  28
  29
  29
  30
  31
  32
  33
  34
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
Variable operating expenses, $m
 
  62
  64
  65
  67
  69
  71
  74
  76
  79
  82
  86
  89
  93
  97
  101
  105
  110
  115
  120
  126
  132
  138
  144
  151
  158
  166
  174
  182
  191
  200
Fixed operating expenses, $m
 
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
  54
  55
  57
  58
  59
  61
  62
  64
  66
  67
  69
  71
  72
  74
  76
  78
  80
  82
  84
Total operating expenses, $m
  100
  103
  106
  108
  111
  114
  117
  122
  125
  129
  133
  138
  143
  148
  154
  159
  164
  171
  177
  184
  192
  199
  207
  215
  223
  232
  242
  252
  262
  273
  284
Operating income, $m
  -73
  -75
  -76
  -78
  -80
  -83
  -85
  -87
  -90
  -93
  -96
  -99
  -102
  -105
  -109
  -113
  -116
  -120
  -125
  -129
  -134
  -138
  -143
  -149
  -154
  -160
  -166
  -172
  -178
  -185
  -192
EBITDA, $m
  -71
  -74
  -76
  -78
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -98
  -101
  -104
  -108
  -111
  -115
  -119
  -123
  -128
  -132
  -137
  -142
  -147
  -152
  -158
  -164
  -170
  -176
  -183
  -190
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  5
Earnings before tax, $m
  -73
  -75
  -76
  -78
  -81
  -83
  -85
  -88
  -91
  -93
  -96
  -100
  -103
  -106
  -110
  -114
  -118
  -122
  -126
  -131
  -136
  -141
  -146
  -151
  -157
  -163
  -169
  -176
  -182
  -189
  -197
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
  -73
  -75
  -76
  -78
  -81
  -83
  -85
  -88
  -91
  -93
  -96
  -100
  -103
  -106
  -110
  -114
  -118
  -122
  -126
  -131
  -136
  -141
  -146
  -151
  -157
  -163
  -169
  -176
  -182
  -189
  -197

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  214
  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
  283
  72
  74
  76
  78
  81
  83
  86
  89
  92
  96
  100
  104
  108
  113
  118
  123
  128
  134
  140
  146
  153
  160
  168
  176
  184
  193
  202
  212
  222
  233
Adjusted assets (=assets-cash), $m
  69
  72
  74
  76
  78
  81
  83
  86
  89
  92
  96
  100
  104
  108
  113
  118
  123
  128
  134
  140
  146
  153
  160
  168
  176
  184
  193
  202
  212
  222
  233
Revenue / Adjusted assets
  0.406
  0.403
  0.392
  0.395
  0.397
  0.395
  0.398
  0.395
  0.393
  0.391
  0.396
  0.390
  0.394
  0.398
  0.389
  0.390
  0.390
  0.391
  0.396
  0.393
  0.397
  0.392
  0.394
  0.393
  0.392
  0.397
  0.394
  0.396
  0.396
  0.396
  0.395
Average production assets, $m
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
Working capital, $m
  191
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
Total debt, $m
  4
  -1
  1
  2
  4
  7
  9
  11
  14
  17
  20
  24
  27
  31
  35
  40
  44
  49
  54
  60
  66
  72
  78
  85
  92
  100
  108
  116
  125
  134
  144
Total liabilities, $m
  70
  65
  67
  68
  70
  73
  75
  77
  80
  83
  86
  90
  93
  97
  101
  106
  110
  115
  120
  126
  132
  138
  144
  151
  158
  166
  174
  182
  191
  200
  210
Total equity, $m
  213
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
Total liabilities and equity, $m
  283
  72
  74
  76
  78
  81
  83
  86
  89
  92
  96
  100
  103
  108
  112
  118
  122
  128
  133
  140
  147
  153
  160
  168
  176
  184
  193
  202
  212
  222
  233
Debt-to-equity ratio
  0.019
  -0.110
  0.100
  0.320
  0.560
  0.810
  1.060
  1.330
  1.590
  1.860
  2.120
  2.380
  2.640
  2.890
  3.140
  3.380
  3.620
  3.850
  4.070
  4.280
  4.490
  4.690
  4.880
  5.070
  5.250
  5.420
  5.580
  5.740
  5.890
  6.030
  6.170
Adjusted equity ratio
  -0.014
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -73
  -75
  -76
  -78
  -81
  -83
  -85
  -88
  -91
  -93
  -96
  -100
  -103
  -106
  -110
  -114
  -118
  -122
  -126
  -131
  -136
  -141
  -146
  -151
  -157
  -163
  -169
  -176
  -182
  -189
  -197
Depreciation, amort., depletion, $m
  2
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
Funds from operations, $m
  15
  -74
  -76
  -78
  -80
  -82
  -84
  -87
  -90
  -93
  -95
  -99
  -102
  -105
  -109
  -113
  -117
  -121
  -125
  -130
  -134
  -139
  -144
  -150
  -155
  -161
  -167
  -174
  -180
  -187
  -195
Change in working capital, $m
  40
  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 operations, $m
  -25
  -74
  -76
  -78
  -80
  -82
  -84
  -87
  -90
  -92
  -95
  -98
  -102
  -105
  -109
  -112
  -116
  -121
  -125
  -129
  -134
  -139
  -144
  -149
  -155
  -161
  -167
  -173
  -180
  -187
  -194
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
New CAPEX, $m
  -2
  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
  -1
  -1
Cash from investing activities, $m
  -219
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
Free cash flow, $m
  -244
  -75
  -77
  -79
  -81
  -83
  -85
  -88
  -91
  -94
  -97
  -100
  -103
  -106
  -110
  -114
  -118
  -122
  -127
  -131
  -136
  -141
  -146
  -152
  -157
  -163
  -170
  -176
  -183
  -190
  -197
Issuance/(repayment) of debt, $m
  -3
  -2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
Issuance/(repurchase) of shares, $m
  136
  78
  77
  79
  81
  83
  86
  88
  91
  94
  97
  100
  103
  107
  110
  114
  118
  122
  127
  131
  136
  141
  147
  152
  158
  164
  170
  177
  183
  191
  198
Cash from financing (excl. dividends), $m  
  133
  76
  79
  81
  83
  85
  88
  91
  94
  97
  100
  103
  107
  111
  114
  118
  123
  127
  132
  136
  142
  147
  153
  159
  165
  172
  178
  185
  192
  200
  208
Total cash flow (excl. dividends), $m
  -111
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
Retained Cash Flow (-), $m
  -69
  -78
  -77
  -79
  -81
  -83
  -86
  -88
  -91
  -94
  -97
  -100
  -103
  -107
  -110
  -114
  -118
  -122
  -127
  -131
  -136
  -141
  -147
  -152
  -158
  -164
  -170
  -177
  -183
  -191
  -198
Prev. year cash balance distribution, $m
 
  209
  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
 
  132
  -75
  -77
  -79
  -81
  -83
  -85
  -88
  -91
  -93
  -96
  -99
  -103
  -106
  -110
  -113
  -117
  -121
  -126
  -130
  -135
  -140
  -145
  -150
  -156
  -162
  -168
  -174
  -181
  -188
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
 
  127
  -69
  -67
  -65
  -63
  -60
  -58
  -55
  -52
  -49
  -46
  -42
  -39
  -36
  -32
  -29
  -26
  -22
  -19
  -17
  -14
  -12
  -9
  -8
  -6
  -5
  -4
  -3
  -2
  -1
Current shareholders' claim on cash, %
  100
  24.5
  9.1
  3.4
  1.3
  0.5
  0.2
  0.1
  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

Blueprint Medicines Corporation, a biopharmaceutical company, develops drugs of small molecule kinase inhibitors that target genomic drivers in various cancers and rare genetic diseases. Its lead drug candidates include BLU-285, which targets KIT Exon 17 mutants and PDGFRa D842V, abnormally active receptor tyrosine kinase mutants for patients with systemic mastocytosis, a myeloproliferative disorder of the mast cells, and defined subsets of patients with gastrointestinal stromal tumor; and BLU-554, an orally available, potent, selective, and irreversible inhibitor of the kinase FGFR4. It is also developing BLU-667, a drug candidate that targets RET, a receptor tyrosine kinase that can become abnormally activated by mutations or translocations; and RET resistant mutants that would arise from treatment with first generation therapies, as well as candidates as inhibitors of neurotrophic tyrosine receptor kinase (NTRK) and predicted NTRK resistant mutants. In addition, the company is developing programs that target oncology and rare genetic diseases. The company has agreement with Alexion Pharma Holding to research, develop, and commercialize drug candidates for an undisclosed activated kinase target, which is the cause of a rare genetic disease. The company was formerly known as Hoyle Pharmaceuticals, Inc. and changed its name to Blueprint Medicines Corporation in June 2011. Blueprint Medicines Corporation was founded in 2008 and is headquartered in Cambridge, Massachusetts.

FINANCIAL RATIOS  of  Blueprint Medicines (BPMC)

Valuation Ratios
P/E Ratio -19.2
Price to Sales 50.1
Price to Book 6.6
Price to Tangible Book
Price to Cash Flow -56.1
Price to Free Cash Flow -52
Growth Rates
Sales Growth Rate 154.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 71
Current Ratio 0
LT Debt to Equity 0.5%
Total Debt to Equity 1.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -31.6%
Ret/ On Assets - 3 Yr. Avg. -75.3%
Return On Total Capital -39.7%
Ret/ On T. Cap. - 3 Yr. Avg. -90.6%
Return On Equity -40.9%
Return On Equity - 3 Yr. Avg. -114.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -253.6%
EBITDA Margin - 3 Yr. Avg. -242.1%
Operating Margin -257.1%
Oper. Margin - 3 Yr. Avg. -243.3%
Pre-Tax Margin -260.7%
Pre-Tax Margin - 3 Yr. Avg. -247.5%
Net Profit Margin -260.7%
Net Profit Margin - 3 Yr. Avg. -247.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BPMC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BPMC stock intrinsic value calculation we used $28 million for the last fiscal year's total revenue generated by Blueprint Medicines. The default revenue input number comes from 2016 income statement of Blueprint Medicines. 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 BPMC 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 BPMC is calculated based on our internal credit rating of Blueprint Medicines, 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 Blueprint Medicines.
    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 BPMC stock the variable cost ratio is equal to 217.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $40 million in the base year in the intrinsic value calculation for BPMC 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 Blueprint Medicines.

Corporate tax rate of 27% is the nominal tax rate for Blueprint Medicines. 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 BPMC 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 BPMC are equal to 23.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Blueprint Medicines 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 BPMC 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 - $213 million for Blueprint Medicines - 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 31.732 million for Blueprint Medicines 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 Blueprint Medicines at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Blueprint Medicines reports 2Q loss   [Aug-02-17 10:34PM  Associated Press]
▶ Alexion cuts ties with two Cambridge biotechs in reorganization   [Jul-27-17 11:20AM  American City Business Journals]
▶ Bluebird and Radius gain, while Blueprint and Tesaro fall, at ASCO cancer summit   [Jun-06-17 06:30AM  American City Business Journals]
▶ Blueprint Medicines reports 1Q loss   [May-03-17 07:26AM  Associated Press]
▶ 3 Stocks That Could Have Doubled Your Money   [Apr-27-17 12:12PM  Motley Fool]
▶ 3 Biotech Stocks That Are Broker Favorites   [Mar-21-17 09:25AM  Zacks]
▶ Is Apptio Inc (APTI) Worthy of Your Portfolio?   [Dec-14-16 01:07PM  at Insider Monkey]
Stock chart of BPMC Financial statements of BPMC
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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