Intrinsic value of Incyte - INCY

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$135.63

  Intrinsic Value

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  Value-price divergence*

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$135.63

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

We calculate the intrinsic value of INCY 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 25.5

 

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, %
  46.68
  34.00
  31.10
  28.49
  26.14
  24.03
  22.12
  20.41
  18.87
  17.48
  16.24
  15.11
  14.10
  13.19
  12.37
  11.63
  10.97
  10.37
  9.84
  9.35
  8.92
  8.53
  8.17
  7.86
  7.57
  7.31
  7.08
  6.87
  6.69
  6.52
  6.37
Revenue, $m
  1,106
  1,482
  1,943
  2,497
  3,149
  3,906
  4,770
  5,743
  6,827
  8,021
  9,323
  10,732
  12,245
  13,861
  15,575
  17,387
  19,295
  21,297
  23,391
  25,579
  27,860
  30,235
  32,707
  35,276
  37,946
  40,721
  43,605
  46,603
  49,719
  52,959
  56,331
Variable operating expenses, $m
 
  1,081
  1,412
  1,810
  2,279
  2,823
  3,445
  4,145
  4,924
  5,782
  6,718
  7,715
  8,803
  9,964
  11,197
  12,500
  13,871
  15,310
  16,816
  18,389
  20,028
  21,736
  23,513
  25,360
  27,279
  29,274
  31,348
  33,502
  35,743
  38,072
  40,496
Fixed operating expenses, $m
 
  158
  162
  166
  170
  174
  179
  183
  188
  192
  197
  202
  207
  212
  218
  223
  229
  234
  240
  246
  252
  259
  265
  272
  279
  286
  293
  300
  307
  315
  323
Total operating expenses, $m
  961
  1,239
  1,574
  1,976
  2,449
  2,997
  3,624
  4,328
  5,112
  5,974
  6,915
  7,917
  9,010
  10,176
  11,415
  12,723
  14,100
  15,544
  17,056
  18,635
  20,280
  21,995
  23,778
  25,632
  27,558
  29,560
  31,641
  33,802
  36,050
  38,387
  40,819
Operating income, $m
  145
  243
  369
  520
  700
  908
  1,147
  1,416
  1,716
  2,047
  2,408
  2,815
  3,235
  3,684
  4,161
  4,665
  5,195
  5,752
  6,335
  6,944
  7,579
  8,241
  8,929
  9,644
  10,388
  11,162
  11,965
  12,800
  13,669
  14,572
  15,512
EBITDA, $m
  203
  318
  462
  636
  841
  1,080
  1,353
  1,661
  2,005
  2,383
  2,797
  3,244
  3,725
  4,238
  4,784
  5,360
  5,967
  6,604
  7,271
  7,967
  8,694
  9,450
  10,237
  11,056
  11,906
  12,790
  13,709
  14,664
  15,657
  16,690
  17,765
Interest expense (income), $m
  7
  23
  15
  26
  39
  55
  72
  93
  116
  141
  170
  200
  234
  269
  308
  348
  391
  436
  483
  533
  585
  638
  695
  753
  814
  877
  942
  1,011
  1,081
  1,155
  1,232
Earnings before tax, $m
  107
  220
  354
  494
  661
  854
  1,074
  1,323
  1,600
  1,905
  2,238
  2,614
  3,001
  3,415
  3,853
  4,316
  4,804
  5,316
  5,852
  6,411
  6,995
  7,602
  8,234
  8,892
  9,575
  10,285
  11,023
  11,790
  12,587
  13,417
  14,280
Tax expense, $m
  3
  60
  95
  133
  178
  230
  290
  357
  432
  514
  604
  706
  810
  922
  1,040
  1,165
  1,297
  1,435
  1,580
  1,731
  1,889
  2,053
  2,223
  2,401
  2,585
  2,777
  2,976
  3,183
  3,399
  3,623
  3,856
Net income, $m
  104
  161
  258
  361
  482
  623
  784
  966
  1,168
  1,391
  1,634
  1,908
  2,191
  2,493
  2,813
  3,151
  3,507
  3,881
  4,272
  4,680
  5,106
  5,550
  6,011
  6,491
  6,990
  7,508
  8,047
  8,607
  9,189
  9,794
  10,425

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  809
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,639
  1,112
  1,458
  1,873
  2,362
  2,930
  3,578
  4,309
  5,122
  6,017
  6,994
  8,051
  9,186
  10,398
  11,684
  13,044
  14,475
  15,976
  17,548
  19,189
  20,900
  22,682
  24,536
  26,464
  28,467
  30,549
  32,712
  34,961
  37,298
  39,729
  42,258
Adjusted assets (=assets-cash), $m
  830
  1,112
  1,458
  1,873
  2,362
  2,930
  3,578
  4,309
  5,122
  6,017
  6,994
  8,051
  9,186
  10,398
  11,684
  13,044
  14,475
  15,976
  17,548
  19,189
  20,900
  22,682
  24,536
  26,464
  28,467
  30,549
  32,712
  34,961
  37,298
  39,729
  42,258
Revenue / Adjusted assets
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
Average production assets, $m
  262
  350
  459
  589
  743
  922
  1,126
  1,355
  1,611
  1,893
  2,200
  2,533
  2,890
  3,271
  3,676
  4,103
  4,554
  5,026
  5,520
  6,037
  6,575
  7,136
  7,719
  8,325
  8,955
  9,610
  10,291
  10,998
  11,734
  12,498
  13,294
Working capital, $m
  720
  -119
  -155
  -200
  -252
  -312
  -382
  -459
  -546
  -642
  -746
  -859
  -980
  -1,109
  -1,246
  -1,391
  -1,544
  -1,704
  -1,871
  -2,046
  -2,229
  -2,419
  -2,617
  -2,822
  -3,036
  -3,258
  -3,488
  -3,728
  -3,977
  -4,237
  -4,506
Total debt, $m
  651
  432
  743
  1,117
  1,557
  2,068
  2,651
  3,309
  4,041
  4,847
  5,726
  6,677
  7,699
  8,789
  9,947
  11,170
  12,458
  13,810
  15,224
  16,701
  18,241
  19,845
  21,513
  23,248
  25,051
  26,925
  28,872
  30,896
  32,999
  35,187
  37,464
Total liabilities, $m
  1,219
  1,001
  1,312
  1,686
  2,126
  2,637
  3,220
  3,878
  4,610
  5,416
  6,295
  7,246
  8,268
  9,358
  10,516
  11,739
  13,027
  14,379
  15,793
  17,270
  18,810
  20,414
  22,082
  23,817
  25,620
  27,494
  29,441
  31,465
  33,568
  35,756
  38,033
Total equity, $m
  419
  111
  146
  187
  236
  293
  358
  431
  512
  602
  699
  805
  919
  1,040
  1,168
  1,304
  1,447
  1,598
  1,755
  1,919
  2,090
  2,268
  2,454
  2,646
  2,847
  3,055
  3,271
  3,496
  3,730
  3,973
  4,226
Total liabilities and equity, $m
  1,638
  1,112
  1,458
  1,873
  2,362
  2,930
  3,578
  4,309
  5,122
  6,018
  6,994
  8,051
  9,187
  10,398
  11,684
  13,043
  14,474
  15,977
  17,548
  19,189
  20,900
  22,682
  24,536
  26,463
  28,467
  30,549
  32,712
  34,961
  37,298
  39,729
  42,259
Debt-to-equity ratio
  1.554
  3.880
  5.100
  5.960
  6.590
  7.060
  7.410
  7.680
  7.890
  8.050
  8.190
  8.290
  8.380
  8.450
  8.510
  8.560
  8.610
  8.640
  8.680
  8.700
  8.730
  8.750
  8.770
  8.780
  8.800
  8.810
  8.830
  8.840
  8.850
  8.860
  8.870
Adjusted equity ratio
  -0.470
  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
  104
  161
  258
  361
  482
  623
  784
  966
  1,168
  1,391
  1,634
  1,908
  2,191
  2,493
  2,813
  3,151
  3,507
  3,881
  4,272
  4,680
  5,106
  5,550
  6,011
  6,491
  6,990
  7,508
  8,047
  8,607
  9,189
  9,794
  10,425
Depreciation, amort., depletion, $m
  58
  75
  93
  115
  142
  172
  206
  245
  289
  336
  389
  429
  490
  554
  623
  695
  772
  852
  936
  1,023
  1,114
  1,209
  1,308
  1,411
  1,518
  1,629
  1,744
  1,864
  1,989
  2,118
  2,253
Funds from operations, $m
  330
  236
  351
  476
  624
  795
  991
  1,211
  1,457
  1,727
  2,023
  2,338
  2,681
  3,047
  3,436
  3,847
  4,279
  4,733
  5,208
  5,703
  6,221
  6,759
  7,319
  7,902
  8,507
  9,137
  9,791
  10,471
  11,178
  11,913
  12,678
Change in working capital, $m
  25
  -30
  -37
  -44
  -52
  -61
  -69
  -78
  -87
  -95
  -104
  -113
  -121
  -129
  -137
  -145
  -153
  -160
  -168
  -175
  -182
  -190
  -198
  -206
  -214
  -222
  -231
  -240
  -249
  -259
  -270
Cash from operations, $m
  305
  441
  388
  521
  676
  855
  1,060
  1,289
  1,544
  1,823
  2,127
  2,450
  2,802
  3,176
  3,573
  3,992
  4,432
  4,893
  5,375
  5,878
  6,403
  6,949
  7,517
  8,107
  8,721
  9,359
  10,021
  10,710
  11,427
  12,172
  12,947
Maintenance CAPEX, $m
  0
  -44
  -59
  -78
  -100
  -126
  -156
  -191
  -230
  -273
  -321
  -373
  -429
  -490
  -554
  -623
  -695
  -772
  -852
  -936
  -1,023
  -1,114
  -1,209
  -1,308
  -1,411
  -1,518
  -1,629
  -1,744
  -1,864
  -1,989
  -2,118
New CAPEX, $m
  -120
  -88
  -109
  -131
  -154
  -179
  -204
  -230
  -256
  -282
  -307
  -332
  -357
  -381
  -405
  -428
  -450
  -472
  -494
  -516
  -538
  -561
  -583
  -606
  -630
  -655
  -681
  -707
  -735
  -765
  -796
Cash from investing activities, $m
  -232
  -132
  -168
  -209
  -254
  -305
  -360
  -421
  -486
  -555
  -628
  -705
  -786
  -871
  -959
  -1,051
  -1,145
  -1,244
  -1,346
  -1,452
  -1,561
  -1,675
  -1,792
  -1,914
  -2,041
  -2,173
  -2,310
  -2,451
  -2,599
  -2,754
  -2,914
Free cash flow, $m
  73
  309
  220
  312
  422
  551
  700
  868
  1,058
  1,268
  1,499
  1,745
  2,015
  2,305
  2,614
  2,941
  3,286
  3,649
  4,029
  4,427
  4,842
  5,274
  5,724
  6,193
  6,680
  7,186
  7,712
  8,259
  8,827
  9,418
  10,033
Issuance/(repayment) of debt, $m
  0
  -219
  311
  374
  441
  511
  583
  657
  732
  806
  879
  951
  1,022
  1,091
  1,158
  1,223
  1,288
  1,351
  1,414
  1,477
  1,540
  1,604
  1,668
  1,735
  1,803
  1,874
  1,947
  2,024
  2,104
  2,188
  2,276
Issuance/(repurchase) of shares, $m
  50
  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  
  59
  -219
  311
  374
  441
  511
  583
  657
  732
  806
  879
  951
  1,022
  1,091
  1,158
  1,223
  1,288
  1,351
  1,414
  1,477
  1,540
  1,604
  1,668
  1,735
  1,803
  1,874
  1,947
  2,024
  2,104
  2,188
  2,276
Total cash flow (excl. dividends), $m
  131
  89
  532
  686
  863
  1,062
  1,283
  1,526
  1,790
  2,074
  2,378
  2,696
  3,037
  3,396
  3,772
  4,164
  4,574
  5,000
  5,443
  5,904
  6,382
  6,878
  7,393
  7,928
  8,483
  9,060
  9,659
  10,283
  10,931
  11,606
  12,310
Retained Cash Flow (-), $m
  -248
  -501
  -35
  -42
  -49
  -57
  -65
  -73
  -81
  -90
  -98
  -106
  -114
  -121
  -129
  -136
  -143
  -150
  -157
  -164
  -171
  -178
  -185
  -193
  -200
  -208
  -216
  -225
  -234
  -243
  -253
Prev. year cash balance distribution, $m
 
  809
  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
 
  397
  497
  644
  814
  1,005
  1,218
  1,453
  1,708
  1,984
  2,280
  2,591
  2,924
  3,275
  3,643
  4,028
  4,431
  4,850
  5,286
  5,739
  6,210
  6,700
  7,207
  7,735
  8,282
  8,851
  9,443
  10,058
  10,697
  11,363
  12,057
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
 
  381
  455
  561
  670
  779
  884
  981
  1,068
  1,140
  1,195
  1,230
  1,248
  1,245
  1,223
  1,183
  1,126
  1,055
  973
  884
  789
  693
  598
  507
  422
  344
  275
  216
  166
  124
  91
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

Incyte Corporation focuses on the discovery, development, and commercialization of proprietary therapeutics in oncology in the United States and internationally. It offers JAKAFI for the treatment of myelofibrosis and polycythemia vera cancers. The company’s clinical stage products include ruxolitinib cream that is in Phase II clinical trial for the treatment of alopecia areata and atopic dermatitis; and baricitinib, which is in Phase III clinical trial for treatment of rheumatoid arthritis. In addition, it is developing itacitinib that is in Phase I/II clinical trials in combination with osimertinib for non-small cell lung cancer (NSCLC); INCB52793, INCB54329 (BRD), INCB57643 (BRD), and INCB53914 (PIM), which are in Phase I/II trials for the treatment of advanced malignancies; INCB54828 (FGFR1/2/3) that is in Phase II clinical trial the treatment of bladder cancer, cholangiocarcinoma, and 8p11 MPNs; INCB59872 (LSD1), which is in Phase II clinical trial the treatment of acute myeloid leukemia and small cell lung cancer; and capmatinib that is in Phase II clinical trial for the treatment of NSCLC and liver cancer. Further, the company’s clinical stage products include epacadostat, which is in Phase II clinical trial for the treatment of various tumors, and in Phase I/II clinical trials for the treatment of NSCLC and bladder cancer, as well as in Phase III clinical trial for the treatment of advanced melanoma; and INCB01158, INCSHR1210, INCAGN1876 (GITR), and INCAGN1949 (OX40), which are in Phase I/II clinical trials for the treatment of solid tumors. It markets its JAKAFI product through a network of specialty pharmacy providers and wholesalers. The company has collaboration agreements with Novartis International Pharmaceutical Ltd.; Eli Lilly and Company; Agenus Inc.; Jiangsu Hengrui Medicine Co., Ltd.; Merus N.V.; Calithera Biosciences, Inc; Pfizer Inc; and Abramson Cancer Center. Incyte Corporation was founded in 1991 and is headquartered in Wilmington, Delaware.

FINANCIAL RATIOS  of  Incyte (INCY)

Valuation Ratios
P/E Ratio 246.3
Price to Sales 23.2
Price to Book 61.1
Price to Tangible Book
Price to Cash Flow 84
Price to Free Cash Flow 138.5
Growth Rates
Sales Growth Rate 46.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 361.5%
Cap. Spend. - 3 Yr. Gr. Rate 97.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 155.4%
Total Debt to Equity 155.4%
Interest Coverage 16
Management Effectiveness
Return On Assets 8.4%
Ret/ On Assets - 3 Yr. Avg. 1.7%
Return On Total Capital 11.2%
Ret/ On T. Cap. - 3 Yr. Avg. 1.1%
Return On Equity 35.3%
Return On Equity - 3 Yr. Avg. 28.6%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 95.8%
Gross Margin - 3 Yr. Avg. 97.2%
EBITDA Margin 15.6%
EBITDA Margin - 3 Yr. Avg. 8.2%
Operating Margin 13.1%
Oper. Margin - 3 Yr. Avg. 6.4%
Pre-Tax Margin 9.7%
Pre-Tax Margin - 3 Yr. Avg. 0.4%
Net Profit Margin 9.4%
Net Profit Margin - 3 Yr. Avg. 0.3%
Effective Tax Rate 2.8%
Eff/ Tax Rate - 3 Yr. Avg. 5.8%
Payout Ratio 0%

INCY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INCY stock intrinsic value calculation we used $1106 million for the last fiscal year's total revenue generated by Incyte. The default revenue input number comes from 2016 income statement of Incyte. 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 INCY stock valuation model: a) initial revenue growth rate of 34% 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 INCY is calculated based on our internal credit rating of Incyte, 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 Incyte.
    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 INCY stock the variable cost ratio is equal to 73.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $154 million in the base year in the intrinsic value calculation for INCY 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 Incyte.

Corporate tax rate of 27% is the nominal tax rate for Incyte. 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 INCY 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 INCY are equal to 23.6%.

Life of production assets of 5.9 years is the average useful life of capital assets used in Incyte 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 INCY is equal to -8%. 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 - $419 million for Incyte - 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 188.11 million for Incyte 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 Incyte at the current share price and the inputted number of shares is $25.5 billion.


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Stock chart of INCY Financial statements of INCY Annual reports of INCY
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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