Intrinsic value of Kite Pharma - KITE

Previous Close

$179.79

  Intrinsic Value

$1.78

stock screener

  Rating & Target

str. sell

-99%

  Value-price divergence*

0%

Previous close

$179.79

 
Intrinsic value

$1.78

 
Up/down potential

-99%

 
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 KITE 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 10.2

 

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, %
  29.41
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  22
  35
  54
  81
  118
  166
  229
  307
  403
  519
  656
  814
  995
  1,200
  1,428
  1,679
  1,953
  2,249
  2,568
  2,908
  3,270
  3,652
  4,054
  4,477
  4,919
  5,380
  5,862
  6,363
  6,885
  7,427
  7,991
Variable operating expenses, $m
 
  250
  385
  574
  832
  1,172
  1,611
  2,161
  2,837
  3,650
  4,610
  5,721
  6,995
  8,431
  10,031
  11,795
  13,720
  15,805
  18,045
  20,437
  22,977
  25,662
  28,489
  31,457
  34,563
  37,808
  41,191
  44,714
  48,380
  52,191
  56,153
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
  295
  250
  385
  574
  832
  1,172
  1,611
  2,161
  2,837
  3,650
  4,610
  5,721
  6,995
  8,431
  10,031
  11,795
  13,720
  15,805
  18,045
  20,437
  22,977
  25,662
  28,489
  31,457
  34,563
  37,808
  41,191
  44,714
  48,380
  52,191
  56,153
Operating income, $m
  -273
  -215
  -330
  -493
  -714
  -1,006
  -1,382
  -1,854
  -2,434
  -3,131
  -3,954
  -4,907
  -5,999
  -7,231
  -8,604
  -10,116
  -11,768
  -13,556
  -15,477
  -17,528
  -19,707
  -22,010
  -24,435
  -26,980
  -29,644
  -32,427
  -35,329
  -38,351
  -41,495
  -44,764
  -48,162
EBITDA, $m
  -262
  -201
  -310
  -464
  -673
  -949
  -1,305
  -1,751
  -2,300
  -2,959
  -3,737
  -4,641
  -5,674
  -6,839
  -8,137
  -9,568
  -11,130
  -12,821
  -14,638
  -16,578
  -18,639
  -20,817
  -23,110
  -25,518
  -28,037
  -30,669
  -33,414
  -36,272
  -39,246
  -42,337
  -45,551
Interest expense (income), $m
  0
  0
  2
  5
  9
  15
  22
  32
  44
  58
  76
  97
  121
  149
  180
  215
  253
  295
  340
  389
  441
  496
  555
  616
  681
  748
  819
  892
  969
  1,048
  1,131
Earnings before tax, $m
  -270
  -215
  -332
  -498
  -723
  -1,020
  -1,404
  -1,886
  -2,477
  -3,189
  -4,030
  -5,004
  -6,120
  -7,380
  -8,784
  -10,331
  -12,021
  -13,851
  -15,817
  -17,917
  -20,148
  -22,506
  -24,990
  -27,596
  -30,325
  -33,175
  -36,148
  -39,243
  -42,464
  -45,813
  -49,293
Tax expense, $m
  -3
  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
  -267
  -215
  -332
  -498
  -723
  -1,020
  -1,404
  -1,886
  -2,477
  -3,189
  -4,030
  -5,004
  -6,120
  -7,380
  -8,784
  -10,331
  -12,021
  -13,851
  -15,817
  -17,917
  -20,148
  -22,506
  -24,990
  -27,596
  -30,325
  -33,175
  -36,148
  -39,243
  -42,464
  -45,813
  -49,293

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  414
  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
  524
  176
  272
  407
  590
  832
  1,144
  1,536
  2,017
  2,596
  3,278
  4,071
  4,977
  5,999
  7,138
  8,393
  9,763
  11,246
  12,840
  14,542
  16,349
  18,260
  20,272
  22,383
  24,593
  26,902
  29,309
  31,816
  34,425
  37,137
  39,956
Adjusted assets (=assets-cash), $m
  110
  176
  272
  407
  590
  832
  1,144
  1,536
  2,017
  2,596
  3,278
  4,071
  4,977
  5,999
  7,138
  8,393
  9,763
  11,246
  12,840
  14,542
  16,349
  18,260
  20,272
  22,383
  24,593
  26,902
  29,309
  31,816
  34,425
  37,137
  39,956
Revenue / Adjusted assets
  0.200
  0.199
  0.199
  0.199
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
Average production assets, $m
  46
  74
  114
  170
  247
  348
  479
  642
  844
  1,085
  1,371
  1,702
  2,081
  2,509
  2,985
  3,510
  4,083
  4,703
  5,370
  6,081
  6,837
  7,636
  8,478
  9,361
  10,285
  11,250
  12,257
  13,306
  14,396
  15,531
  16,710
Working capital, $m
  372
  -67
  -104
  -155
  -225
  -318
  -437
  -587
  -770
  -991
  -1,252
  -1,554
  -1,900
  -2,290
  -2,725
  -3,204
  -3,727
  -4,294
  -4,902
  -5,552
  -6,242
  -6,972
  -7,740
  -8,546
  -9,390
  -10,271
  -11,190
  -12,147
  -13,143
  -14,179
  -15,255
Total debt, $m
  0
  58
  141
  259
  419
  631
  903
  1,245
  1,665
  2,170
  2,766
  3,458
  4,249
  5,141
  6,135
  7,231
  8,427
  9,722
  11,113
  12,599
  14,177
  15,845
  17,601
  19,445
  21,374
  23,389
  25,491
  27,680
  29,957
  32,324
  34,785
Total liabilities, $m
  96
  154
  237
  355
  515
  727
  999
  1,341
  1,761
  2,266
  2,862
  3,554
  4,345
  5,237
  6,231
  7,327
  8,523
  9,818
  11,209
  12,695
  14,273
  15,941
  17,697
  19,541
  21,470
  23,485
  25,587
  27,776
  30,053
  32,420
  34,881
Total equity, $m
  428
  22
  35
  52
  75
  106
  145
  195
  256
  330
  416
  517
  632
  762
  906
  1,066
  1,240
  1,428
  1,631
  1,847
  2,076
  2,319
  2,574
  2,843
  3,123
  3,417
  3,722
  4,041
  4,372
  4,716
  5,074
Total liabilities and equity, $m
  524
  176
  272
  407
  590
  833
  1,144
  1,536
  2,017
  2,596
  3,278
  4,071
  4,977
  5,999
  7,137
  8,393
  9,763
  11,246
  12,840
  14,542
  16,349
  18,260
  20,271
  22,384
  24,593
  26,902
  29,309
  31,817
  34,425
  37,136
  39,955
Debt-to-equity ratio
  0.000
  2.580
  4.090
  5.020
  5.590
  5.970
  6.210
  6.380
  6.500
  6.580
  6.640
  6.690
  6.720
  6.750
  6.770
  6.780
  6.800
  6.810
  6.820
  6.820
  6.830
  6.830
  6.840
  6.840
  6.840
  6.850
  6.850
  6.850
  6.850
  6.850
  6.860
Adjusted equity ratio
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -267
  -215
  -332
  -498
  -723
  -1,020
  -1,404
  -1,886
  -2,477
  -3,189
  -4,030
  -5,004
  -6,120
  -7,380
  -8,784
  -10,331
  -12,021
  -13,851
  -15,817
  -17,917
  -20,148
  -22,506
  -24,990
  -27,596
  -30,325
  -33,175
  -36,148
  -39,243
  -42,464
  -45,813
  -49,293
Depreciation, amort., depletion, $m
  11
  14
  20
  29
  41
  57
  77
  103
  134
  172
  217
  266
  325
  392
  466
  548
  638
  735
  839
  950
  1,068
  1,193
  1,325
  1,463
  1,607
  1,758
  1,915
  2,079
  2,249
  2,427
  2,611
Funds from operations, $m
  -153
  -201
  -312
  -469
  -682
  -964
  -1,327
  -1,783
  -2,343
  -3,017
  -3,813
  -4,738
  -5,795
  -6,988
  -8,317
  -9,783
  -11,383
  -13,116
  -14,978
  -16,967
  -19,080
  -21,313
  -23,665
  -26,134
  -28,718
  -31,417
  -34,232
  -37,164
  -40,214
  -43,386
  -46,682
Change in working capital, $m
  16
  -25
  -37
  -51
  -70
  -93
  -119
  -150
  -184
  -221
  -261
  -303
  -346
  -390
  -435
  -479
  -523
  -566
  -609
  -650
  -690
  -729
  -768
  -806
  -844
  -881
  -919
  -957
  -996
  -1,035
  -1,076
Cash from operations, $m
  -169
  -175
  -275
  -417
  -612
  -871
  -1,208
  -1,633
  -2,160
  -2,796
  -3,553
  -4,435
  -5,449
  -6,598
  -7,883
  -9,304
  -10,860
  -12,549
  -14,369
  -16,317
  -18,389
  -20,584
  -22,897
  -25,328
  -27,874
  -30,536
  -33,313
  -36,207
  -39,218
  -42,350
  -45,606
Maintenance CAPEX, $m
  0
  -7
  -12
  -18
  -27
  -39
  -54
  -75
  -100
  -132
  -170
  -214
  -266
  -325
  -392
  -466
  -548
  -638
  -735
  -839
  -950
  -1,068
  -1,193
  -1,325
  -1,463
  -1,607
  -1,758
  -1,915
  -2,079
  -2,249
  -2,427
New CAPEX, $m
  -20
  -28
  -40
  -56
  -77
  -101
  -130
  -164
  -201
  -242
  -286
  -331
  -379
  -427
  -476
  -525
  -573
  -620
  -667
  -712
  -756
  -799
  -841
  -883
  -924
  -965
  -1,007
  -1,048
  -1,091
  -1,134
  -1,179
Cash from investing activities, $m
  -113
  -35
  -52
  -74
  -104
  -140
  -184
  -239
  -301
  -374
  -456
  -545
  -645
  -752
  -868
  -991
  -1,121
  -1,258
  -1,402
  -1,551
  -1,706
  -1,867
  -2,034
  -2,208
  -2,387
  -2,572
  -2,765
  -2,963
  -3,170
  -3,383
  -3,606
Free cash flow, $m
  -282
  -210
  -327
  -491
  -715
  -1,011
  -1,393
  -1,872
  -2,461
  -3,170
  -4,008
  -4,981
  -6,094
  -7,350
  -8,751
  -10,295
  -11,981
  -13,808
  -15,771
  -17,868
  -20,096
  -22,451
  -24,931
  -27,535
  -30,261
  -33,109
  -36,078
  -39,171
  -42,388
  -45,734
  -49,212
Issuance/(repayment) of debt, $m
  0
  58
  84
  118
  160
  212
  272
  342
  420
  505
  596
  692
  791
  892
  994
  1,096
  1,196
  1,295
  1,391
  1,486
  1,578
  1,668
  1,756
  1,843
  1,930
  2,015
  2,102
  2,189
  2,277
  2,368
  2,461
Issuance/(repurchase) of shares, $m
  4
  223
  344
  515
  746
  1,051
  1,444
  1,935
  2,538
  3,263
  4,117
  5,105
  6,235
  7,510
  8,928
  10,491
  12,195
  14,039
  16,019
  18,133
  20,377
  22,749
  25,245
  27,864
  30,606
  33,469
  36,453
  39,561
  42,795
  46,157
  49,651
Cash from financing (excl. dividends), $m  
  4
  281
  428
  633
  906
  1,263
  1,716
  2,277
  2,958
  3,768
  4,713
  5,797
  7,026
  8,402
  9,922
  11,587
  13,391
  15,334
  17,410
  19,619
  21,955
  24,417
  27,001
  29,707
  32,536
  35,484
  38,555
  41,750
  45,072
  48,525
  52,112
Total cash flow (excl. dividends), $m
  -278
  70
  101
  141
  191
  252
  323
  405
  497
  598
  705
  816
  932
  1,052
  1,172
  1,291
  1,410
  1,526
  1,640
  1,751
  1,860
  1,966
  2,070
  2,173
  2,274
  2,375
  2,477
  2,580
  2,684
  2,791
  2,900
Retained Cash Flow (-), $m
  188
  -223
  -344
  -515
  -746
  -1,051
  -1,444
  -1,935
  -2,538
  -3,263
  -4,117
  -5,105
  -6,235
  -7,510
  -8,928
  -10,491
  -12,195
  -14,039
  -16,019
  -18,133
  -20,377
  -22,749
  -25,245
  -27,864
  -30,606
  -33,469
  -36,453
  -39,561
  -42,795
  -46,157
  -49,651
Prev. year cash balance distribution, $m
 
  414
  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
 
  261
  -243
  -374
  -555
  -799
  -1,120
  -1,530
  -2,041
  -2,665
  -3,412
  -4,289
  -5,303
  -6,458
  -7,757
  -9,199
  -10,785
  -12,513
  -14,379
  -16,382
  -18,518
  -20,783
  -23,175
  -25,692
  -28,332
  -31,093
  -33,976
  -36,982
  -40,111
  -43,366
  -46,751
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
 
  251
  -223
  -325
  -457
  -620
  -813
  -1,034
  -1,276
  -1,531
  -1,789
  -2,037
  -2,263
  -2,456
  -2,604
  -2,701
  -2,741
  -2,723
  -2,648
  -2,522
  -2,353
  -2,150
  -1,923
  -1,684
  -1,443
  -1,210
  -991
  -794
  -621
  -473
  -352
Current shareholders' claim on cash, %
  100
  38.6
  15.2
  6.1
  2.5
  1.0
  0.4
  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

Kite Pharma, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on the development and commercialization of cancer immunotherapy products to target and kill cancer cells. The Company offers engineered autologous cell therapy, which is an approach to the treatment of cancer. Its therapy involves modifying a patient's T cells outside the patient's body, or ex vivo, causing the T cells to express chimeric antigen receptors (CARs), or T cell receptors (TCRs), and then reinfusing the engineered T cells back into the patient. Its lead product candidate, KTE-C19, is a CAR-based therapy that targets the CD19 antigen, a protein expressed on the cell surface of B-cell lymphomas and leukemias. The Company is conducting a registrational Phase II clinical trial (ZUMA-1) of KTE-C19 in patients with relapsed or refractory aggressive diffuse large B cell lymphoma (DLBCL), primary mediastinal B cell lymphoma (PMBCL), or transformed follicular lymphoma (TFL).

FINANCIAL RATIOS  of  Kite Pharma (KITE)

Valuation Ratios
P/E Ratio -33.5
Price to Sales 406.8
Price to Book 20.9
Price to Tangible Book
Price to Cash Flow -53
Price to Free Cash Flow -47.4
Growth Rates
Sales Growth Rate 29.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.9%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -43.3%
Ret/ On Assets - 3 Yr. Avg. -28%
Return On Total Capital -51.1%
Ret/ On T. Cap. - 3 Yr. Avg. -31.4%
Return On Equity -51.1%
Return On Equity - 3 Yr. Avg. -31.4%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -1177.3%
EBITDA Margin - 3 Yr. Avg. -582.6%
Operating Margin -1240.9%
Oper. Margin - 3 Yr. Avg. -617.6%
Pre-Tax Margin -1227.3%
Pre-Tax Margin - 3 Yr. Avg. -609.1%
Net Profit Margin -1213.6%
Net Profit Margin - 3 Yr. Avg. -604.5%
Effective Tax Rate 1.1%
Eff/ Tax Rate - 3 Yr. Avg. 0.4%
Payout Ratio 0%

KITE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KITE stock intrinsic value calculation we used $22 million for the last fiscal year's total revenue generated by Kite Pharma. The default revenue input number comes from 2016 income statement of Kite Pharma. 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 KITE stock valuation model: a) initial revenue growth rate of 60% 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 KITE is calculated based on our internal credit rating of Kite Pharma, 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 Kite Pharma.
    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 KITE stock the variable cost ratio is equal to 713.6%.

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 KITE 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 Kite Pharma.

Corporate tax rate of 27% is the nominal tax rate for Kite Pharma. 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 KITE 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 KITE are equal to 209.1%.

Life of production assets of 6.4 years is the average useful life of capital assets used in Kite Pharma 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 KITE is equal to -190.9%. 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 - $428 million for Kite Pharma - 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 56.794 million for Kite Pharma 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 Kite Pharma at the current share price and the inputted number of shares is $10.2 billion.

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Financial statements of KITE
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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