Intrinsic value of Celgene - CELG

Previous Close

$127.65

  Intrinsic Value

$113.99

stock screener

  Rating & Target

hold

-11%

  Value-price divergence*

-42%

Previous close

$127.65

 
Intrinsic value

$113.99

 
Up/down potential

-11%

 
Rating

hold

 
Value-price divergence*

-42%

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

We calculate the intrinsic value of CELG 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 100.7

 

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, %
  21.32
  17.80
  16.52
  15.37
  14.33
  13.40
  12.56
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.62
  8.25
  7.93
  7.64
  7.37
  7.13
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
Revenue, $m
  11,229
  13,228
  15,413
  17,782
  20,330
  23,054
  25,949
  29,012
  32,238
  35,627
  39,175
  42,882
  46,748
  50,776
  54,966
  59,324
  63,854
  68,561
  73,453
  78,537
  83,821
  89,317
  95,034
  100,983
  107,178
  113,631
  120,357
  127,370
  134,687
  142,323
  150,298
Variable operating expenses, $m
 
  9,093
  10,515
  12,057
  13,715
  15,487
  17,371
  19,363
  21,463
  23,668
  25,976
  27,902
  30,417
  33,038
  35,765
  38,600
  41,548
  44,610
  47,793
  51,101
  54,540
  58,116
  61,835
  65,706
  69,737
  73,936
  78,312
  82,876
  87,636
  92,605
  97,794
Fixed operating expenses, $m
 
  660
  677
  694
  711
  729
  747
  766
  785
  804
  824
  845
  866
  888
  910
  933
  956
  980
  1,004
  1,030
  1,055
  1,082
  1,109
  1,136
  1,165
  1,194
  1,224
  1,254
  1,286
  1,318
  1,351
Total operating expenses, $m
  8,419
  9,753
  11,192
  12,751
  14,426
  16,216
  18,118
  20,129
  22,248
  24,472
  26,800
  28,747
  31,283
  33,926
  36,675
  39,533
  42,504
  45,590
  48,797
  52,131
  55,595
  59,198
  62,944
  66,842
  70,902
  75,130
  79,536
  84,130
  88,922
  93,923
  99,145
Operating income, $m
  2,810
  3,474
  4,221
  5,032
  5,905
  6,838
  7,831
  8,883
  9,991
  11,155
  12,374
  14,135
  15,465
  16,850
  18,292
  19,791
  21,350
  22,971
  24,655
  26,406
  28,226
  30,120
  32,090
  34,141
  36,276
  38,501
  40,821
  43,240
  45,765
  48,401
  51,153
EBITDA, $m
  3,315
  4,396
  5,215
  6,104
  7,061
  8,084
  9,173
  10,325
  11,539
  12,815
  14,151
  15,547
  17,004
  18,522
  20,102
  21,745
  23,453
  25,229
  27,074
  28,992
  30,987
  33,061
  35,220
  37,466
  39,806
  42,244
  44,785
  47,435
  50,201
  53,088
  56,103
Interest expense (income), $m
  527
  510
  648
  799
  963
  1,139
  1,327
  1,527
  1,739
  1,962
  2,196
  2,442
  2,698
  2,965
  3,244
  3,533
  3,835
  4,148
  4,473
  4,811
  5,163
  5,528
  5,908
  6,303
  6,714
  7,143
  7,589
  8,054
  8,538
  9,044
  9,572
Earnings before tax, $m
  2,373
  2,964
  3,573
  4,232
  4,942
  5,699
  6,504
  7,355
  8,252
  9,192
  10,178
  11,693
  12,767
  13,885
  15,048
  16,258
  17,516
  18,823
  20,182
  21,595
  23,064
  24,592
  26,182
  27,837
  29,562
  31,359
  33,232
  35,187
  37,227
  39,356
  41,581
Tax expense, $m
  374
  800
  965
  1,143
  1,334
  1,539
  1,756
  1,986
  2,228
  2,482
  2,748
  3,157
  3,447
  3,749
  4,063
  4,390
  4,729
  5,082
  5,449
  5,831
  6,227
  6,640
  7,069
  7,516
  7,982
  8,467
  8,973
  9,500
  10,051
  10,626
  11,227
Net income, $m
  1,999
  2,164
  2,608
  3,090
  3,607
  4,160
  4,748
  5,369
  6,024
  6,711
  7,430
  8,536
  9,320
  10,136
  10,985
  11,868
  12,787
  13,741
  14,733
  15,764
  16,837
  17,952
  19,113
  20,321
  21,580
  22,892
  24,260
  25,686
  27,175
  28,730
  30,354

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  7,970
  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
  28,086
  29,526
  34,404
  39,691
  45,379
  51,459
  57,922
  64,758
  71,961
  79,524
  87,443
  95,718
  104,349
  113,339
  122,693
  132,420
  142,531
  153,038
  163,957
  175,305
  187,102
  199,368
  212,129
  225,409
  239,237
  253,641
  268,654
  284,309
  300,640
  317,686
  335,486
Adjusted assets (=assets-cash), $m
  20,116
  29,526
  34,404
  39,691
  45,379
  51,459
  57,922
  64,758
  71,961
  79,524
  87,443
  95,718
  104,349
  113,339
  122,693
  132,420
  142,531
  153,038
  163,957
  175,305
  187,102
  199,368
  212,129
  225,409
  239,237
  253,641
  268,654
  284,309
  300,640
  317,686
  335,486
Revenue / Adjusted assets
  0.558
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
Average production assets, $m
  11,090
  13,069
  15,228
  17,568
  20,086
  22,777
  25,638
  28,663
  31,851
  35,199
  38,704
  42,367
  46,187
  50,166
  54,307
  58,612
  63,088
  67,739
  72,571
  77,594
  82,816
  88,245
  93,893
  99,772
  105,892
  112,268
  118,913
  125,842
  133,071
  140,616
  148,494
Working capital, $m
  7,909
  516
  601
  693
  793
  899
  1,012
  1,131
  1,257
  1,389
  1,528
  1,672
  1,823
  1,980
  2,144
  2,314
  2,490
  2,674
  2,865
  3,063
  3,269
  3,483
  3,706
  3,938
  4,180
  4,432
  4,694
  4,967
  5,253
  5,551
  5,862
Total debt, $m
  14,289
  17,515
  21,598
  26,024
  30,785
  35,874
  41,283
  47,004
  53,033
  59,363
  65,992
  72,918
  80,142
  87,666
  95,496
  103,638
  112,101
  120,895
  130,034
  139,532
  149,406
  159,673
  170,354
  181,470
  193,043
  205,100
  217,666
  230,768
  244,438
  258,705
  273,604
Total liabilities, $m
  21,486
  24,713
  28,796
  33,222
  37,983
  43,072
  48,481
  54,202
  60,231
  66,561
  73,190
  80,116
  87,340
  94,864
  102,694
  110,836
  119,299
  128,093
  137,232
  146,730
  156,604
  166,871
  177,552
  188,668
  200,241
  212,298
  224,864
  237,966
  251,636
  265,903
  280,802
Total equity, $m
  6,599
  4,813
  5,608
  6,470
  7,397
  8,388
  9,441
  10,556
  11,730
  12,962
  14,253
  15,602
  17,009
  18,474
  19,999
  21,585
  23,233
  24,945
  26,725
  28,575
  30,498
  32,497
  34,577
  36,742
  38,996
  41,344
  43,791
  46,342
  49,004
  51,783
  54,684
Total liabilities and equity, $m
  28,085
  29,526
  34,404
  39,692
  45,380
  51,460
  57,922
  64,758
  71,961
  79,523
  87,443
  95,718
  104,349
  113,338
  122,693
  132,421
  142,532
  153,038
  163,957
  175,305
  187,102
  199,368
  212,129
  225,410
  239,237
  253,642
  268,655
  284,308
  300,640
  317,686
  335,486
Debt-to-equity ratio
  2.165
  3.640
  3.850
  4.020
  4.160
  4.280
  4.370
  4.450
  4.520
  4.580
  4.630
  4.670
  4.710
  4.750
  4.780
  4.800
  4.830
  4.850
  4.870
  4.880
  4.900
  4.910
  4.930
  4.940
  4.950
  4.960
  4.970
  4.980
  4.990
  5.000
  5.000
Adjusted equity ratio
  -0.068
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,999
  2,164
  2,608
  3,090
  3,607
  4,160
  4,748
  5,369
  6,024
  6,711
  7,430
  8,536
  9,320
  10,136
  10,985
  11,868
  12,787
  13,741
  14,733
  15,764
  16,837
  17,952
  19,113
  20,321
  21,580
  22,892
  24,260
  25,686
  27,175
  28,730
  30,354
Depreciation, amort., depletion, $m
  505
  922
  994
  1,072
  1,156
  1,246
  1,341
  1,442
  1,548
  1,660
  1,777
  1,412
  1,540
  1,672
  1,810
  1,954
  2,103
  2,258
  2,419
  2,586
  2,761
  2,942
  3,130
  3,326
  3,530
  3,742
  3,964
  4,195
  4,436
  4,687
  4,950
Funds from operations, $m
  4,522
  3,086
  3,602
  4,162
  4,764
  5,406
  6,089
  6,811
  7,572
  8,370
  9,206
  9,948
  10,859
  11,808
  12,795
  13,822
  14,889
  15,999
  17,152
  18,351
  19,597
  20,894
  22,243
  23,647
  25,110
  26,634
  28,223
  29,881
  31,611
  33,417
  35,304
Change in working capital, $m
  546
  78
  85
  92
  99
  106
  113
  119
  126
  132
  138
  145
  151
  157
  163
  170
  177
  184
  191
  198
  206
  214
  223
  232
  242
  252
  262
  274
  285
  298
  311
Cash from operations, $m
  3,976
  3,008
  3,517
  4,070
  4,664
  5,300
  5,976
  6,692
  7,446
  8,238
  9,068
  9,804
  10,708
  11,651
  12,632
  13,652
  14,713
  15,815
  16,961
  18,152
  19,391
  20,679
  22,020
  23,415
  24,868
  26,382
  27,961
  29,608
  31,326
  33,120
  34,993
Maintenance CAPEX, $m
  0
  -370
  -436
  -508
  -586
  -670
  -759
  -855
  -955
  -1,062
  -1,173
  -1,290
  -1,412
  -1,540
  -1,672
  -1,810
  -1,954
  -2,103
  -2,258
  -2,419
  -2,586
  -2,761
  -2,942
  -3,130
  -3,326
  -3,530
  -3,742
  -3,964
  -4,195
  -4,436
  -4,687
New CAPEX, $m
  -236
  -1,979
  -2,159
  -2,340
  -2,518
  -2,691
  -2,860
  -3,026
  -3,188
  -3,348
  -3,505
  -3,663
  -3,820
  -3,979
  -4,141
  -4,306
  -4,475
  -4,651
  -4,833
  -5,023
  -5,221
  -5,430
  -5,648
  -5,878
  -6,120
  -6,376
  -6,645
  -6,929
  -7,229
  -7,545
  -7,879
Cash from investing activities, $m
  -1,002
  -2,349
  -2,595
  -2,848
  -3,104
  -3,361
  -3,619
  -3,881
  -4,143
  -4,410
  -4,678
  -4,953
  -5,232
  -5,519
  -5,813
  -6,116
  -6,429
  -6,754
  -7,091
  -7,442
  -7,807
  -8,191
  -8,590
  -9,008
  -9,446
  -9,906
  -10,387
  -10,893
  -11,424
  -11,981
  -12,566
Free cash flow, $m
  2,974
  659
  923
  1,222
  1,561
  1,939
  2,357
  2,811
  3,303
  3,829
  4,389
  4,851
  5,476
  6,132
  6,819
  7,536
  8,284
  9,062
  9,870
  10,711
  11,583
  12,489
  13,430
  14,407
  15,422
  16,477
  17,574
  18,715
  19,902
  21,139
  22,427
Issuance/(repayment) of debt, $m
  0
  3,727
  4,083
  4,425
  4,761
  5,089
  5,409
  5,722
  6,029
  6,330
  6,629
  6,926
  7,224
  7,524
  7,830
  8,142
  8,463
  8,795
  9,139
  9,498
  9,874
  10,267
  10,681
  11,116
  11,574
  12,057
  12,566
  13,103
  13,670
  14,267
  14,898
Issuance/(repurchase) of shares, $m
  -1,793
  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 financing (excl. dividends), $m  
  -1,646
  3,727
  4,083
  4,425
  4,761
  5,089
  5,409
  5,722
  6,029
  6,330
  6,629
  6,926
  7,224
  7,524
  7,830
  8,142
  8,463
  8,795
  9,139
  9,498
  9,874
  10,267
  10,681
  11,116
  11,574
  12,057
  12,566
  13,103
  13,670
  14,267
  14,898
Total cash flow (excl. dividends), $m
  1,290
  4,387
  5,005
  5,647
  6,322
  7,028
  7,766
  8,533
  9,331
  10,159
  11,018
  11,777
  12,700
  13,657
  14,649
  15,678
  16,747
  17,856
  19,009
  20,209
  21,457
  22,756
  24,111
  25,523
  26,996
  28,534
  30,140
  31,818
  33,572
  35,406
  37,326
Retained Cash Flow (-), $m
  -680
  -740
  -795
  -862
  -927
  -991
  -1,053
  -1,114
  -1,174
  -1,233
  -1,291
  -1,349
  -1,407
  -1,465
  -1,525
  -1,586
  -1,648
  -1,713
  -1,780
  -1,850
  -1,923
  -1,999
  -2,080
  -2,165
  -2,254
  -2,348
  -2,447
  -2,552
  -2,662
  -2,778
  -2,901
Prev. year cash balance distribution, $m
 
  2,526
  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
 
  6,173
  4,210
  4,785
  5,395
  6,037
  6,712
  7,419
  8,157
  8,926
  9,727
  10,428
  11,293
  12,191
  13,124
  14,093
  15,098
  16,143
  17,230
  18,359
  19,534
  20,757
  22,031
  23,358
  24,742
  26,186
  27,692
  29,266
  30,910
  32,628
  34,424
Discount rate, %
 
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
PV of cash for distribution, $m
 
  5,896
  3,824
  4,112
  4,364
  4,573
  4,732
  4,838
  4,887
  4,878
  4,812
  4,632
  4,465
  4,252
  3,997
  3,710
  3,397
  3,068
  2,732
  2,397
  2,070
  1,759
  1,470
  1,207
  973
  769
  595
  451
  334
  242
  171
Current shareholders' claim on cash, %
  100
  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
  100.0

Celgene Corporation discovers, develops, and commercializes therapies to treat cancer and inflammatory diseases worldwide. It offers REVLIMID, an oral immunomodulatory drug for multiple myeloma, myelodysplastic syndromes (MDS), and mantle cell lymphoma; POMALYST/IMNOVID to treat multiple myeloma; OTEZLA, a small-molecule inhibitor of phosphodiesterase 4 for psoriatic arthritis, psoriasis, and ankylosing spondylitis; and ABRAXANE, a solvent-free chemotherapy product to treat breast, non-small cell lung, pancreatic, and gastric cancers. The company’s products also include VIDAZA, a pyrimidine nucleoside analog for intermediate-2 and high-risk MDS, chronic myelomonocytic leukemia, and acute myeloid leukemia (AML); THALOMID to treat patients with multiple myeloma and erythema nodosum leprosum; and RITALIN and FOCALIN XR products. Its clinical stage products comprise OTEZLA for use in treating various immune-inflammatory diseases; luspatercept for beta-thalassemia and MDS; CC-486 to treat MDS, AML, and solid tumors; AG-881 for glioma with IDH mutations; LSD1 inhibitor to treat non-hodgkin lymphoma and solid tumors; CC-122 and CC-220 to treat hematological and solid tumor cancers, and inflammation and immunology diseases; and durvalumab, an anti-PDL-1 antibody, for multiple hematological cancers. The company has collaborative agreements with Acceleron Pharma, Inc.; Agios Pharmaceuticals, Inc.; Sutro Biopharma, Inc.; bluebird bio, Inc.; FORMA Therapeutics Holdings, LLC; OncoMed Pharmaceuticals, Inc.; NantBioScience, Inc.; AstraZeneca PLC; Lycera Corp.; Juno Therapeutics, Inc.; Nurix Inc.; and Jounce Therapeutics, Inc.; The company was founded in 1980 and is headquartered in Summit, New Jersey.

FINANCIAL RATIOS  of  Celgene (CELG)

Valuation Ratios
P/E Ratio 49.7
Price to Sales 8.9
Price to Book 15.1
Price to Tangible Book
Price to Cash Flow 25
Price to Free Cash Flow 26.6
Growth Rates
Sales Growth Rate 21.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.5%
Cap. Spend. - 3 Yr. Gr. Rate 11.2%
Financial Strength
Quick Ratio 16
Current Ratio 0.2
LT Debt to Equity 208.9%
Total Debt to Equity 216.5%
Interest Coverage 6
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 10.4%
Return On Total Capital 9.8%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 31.9%
Return On Equity - 3 Yr. Avg. 30.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 96.1%
Gross Margin - 3 Yr. Avg. 95.5%
EBITDA Margin 30.3%
EBITDA Margin - 3 Yr. Avg. 32.3%
Operating Margin 25%
Oper. Margin - 3 Yr. Avg. 27.2%
Pre-Tax Margin 21.1%
Pre-Tax Margin - 3 Yr. Avg. 24.4%
Net Profit Margin 17.8%
Net Profit Margin - 3 Yr. Avg. 20.4%
Effective Tax Rate 15.8%
Eff/ Tax Rate - 3 Yr. Avg. 16.9%
Payout Ratio 0%

CELG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CELG stock intrinsic value calculation we used $11229 million for the last fiscal year's total revenue generated by Celgene. The default revenue input number comes from 2016 income statement of Celgene. 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 CELG stock valuation model: a) initial revenue growth rate of 17.8% 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 4.7%, whose default value for CELG is calculated based on our internal credit rating of Celgene, 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 Celgene.
    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 CELG stock the variable cost ratio is equal to 69.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $644 million in the base year in the intrinsic value calculation for CELG 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 3.7% for Celgene.

Corporate tax rate of 27% is the nominal tax rate for Celgene. 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 CELG 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 CELG are equal to 98.8%.

Life of production assets of 31.6 years is the average useful life of capital assets used in Celgene 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 CELG is equal to 3.9%. 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 - $6599 million for Celgene - 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 789.006 million for Celgene 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 Celgene at the current share price and the inputted number of shares is $100.7 billion.

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▶ Celgene Corp. to pay $280M to settle cancer drug fraud suit   [Jul-25-17 10:59PM  Associated Press]
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▶ The Best Stock in New Jersey: Celgene   [Jul-20-17 02:29PM  Kiplinger]
Stock chart of CELG Financial statements of CELG
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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