Intrinsic value of Ligand Pharmaceuticals - LGND

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$104.39

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$104.39

 
Intrinsic value

$209.96

 
Up/down potential

+101%

 
Rating

str. buy

 
Value-price divergence* premium content

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

We calculate the intrinsic value of LGND 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 2.2

 

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, %
  51.39
  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
  109
  174
  269
  403
  585
  825
  1,134
  1,522
  1,999
  2,572
  3,249
  4,034
  4,932
  5,945
  7,073
  8,316
  9,674
  11,144
  12,723
  14,409
  16,200
  18,094
  20,087
  22,180
  24,370
  26,657
  29,043
  31,527
  34,112
  36,799
  39,593
Variable operating expenses, $m
 
  34
  49
  69
  97
  134
  182
  242
  315
  403
  507
  621
  759
  915
  1,089
  1,280
  1,489
  1,716
  1,959
  2,218
  2,494
  2,785
  3,092
  3,414
  3,752
  4,104
  4,471
  4,853
  5,251
  5,665
  6,095
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
  65
  34
  49
  69
  97
  134
  182
  242
  315
  403
  507
  621
  759
  915
  1,089
  1,280
  1,489
  1,716
  1,959
  2,218
  2,494
  2,785
  3,092
  3,414
  3,752
  4,104
  4,471
  4,853
  5,251
  5,665
  6,095
Operating income, $m
  44
  140
  221
  334
  487
  691
  952
  1,281
  1,684
  2,169
  2,741
  3,413
  4,173
  5,029
  5,984
  7,036
  8,185
  9,428
  10,764
  12,191
  13,706
  15,308
  16,995
  18,765
  20,618
  22,554
  24,572
  26,674
  28,860
  31,134
  33,497
EBITDA, $m
  55
  161
  249
  372
  540
  762
  1,048
  1,407
  1,847
  2,377
  3,002
  3,728
  4,557
  5,493
  6,536
  7,685
  8,939
  10,297
  11,757
  13,315
  14,970
  16,720
  18,562
  20,495
  22,519
  24,633
  26,837
  29,133
  31,521
  34,005
  36,586
Interest expense (income), $m
  2
  4
  6
  10
  15
  22
  31
  43
  58
  76
  99
  125
  155
  190
  229
  272
  320
  372
  429
  490
  555
  624
  697
  774
  855
  939
  1,027
  1,119
  1,215
  1,315
  1,418
Earnings before tax, $m
  8
  137
  215
  324
  473
  669
  921
  1,238
  1,626
  2,092
  2,643
  3,288
  4,018
  4,840
  5,755
  6,764
  7,865
  9,056
  10,335
  11,701
  13,152
  14,684
  16,298
  17,991
  19,764
  21,615
  23,545
  25,554
  27,645
  29,820
  32,079
Tax expense, $m
  10
  37
  58
  87
  128
  181
  249
  334
  439
  565
  714
  888
  1,085
  1,307
  1,554
  1,826
  2,123
  2,445
  2,791
  3,159
  3,551
  3,965
  4,400
  4,858
  5,336
  5,836
  6,357
  6,900
  7,464
  8,051
  8,661
Net income, $m
  -2
  100
  157
  237
  345
  488
  672
  903
  1,187
  1,527
  1,929
  2,400
  2,933
  3,533
  4,201
  4,938
  5,741
  6,611
  7,545
  8,542
  9,601
  10,720
  11,898
  13,134
  14,427
  15,779
  17,188
  18,655
  20,181
  21,768
  23,418

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  141
  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
  602
  739
  1,142
  1,707
  2,477
  3,495
  4,805
  6,450
  8,469
  10,898
  13,765
  17,093
  20,898
  25,189
  29,970
  35,239
  40,992
  47,219
  53,911
  61,057
  68,646
  76,669
  85,116
  93,982
  103,262
  112,955
  123,063
  133,590
  144,542
  155,929
  167,765
Adjusted assets (=assets-cash), $m
  461
  739
  1,142
  1,707
  2,477
  3,495
  4,805
  6,450
  8,469
  10,898
  13,765
  17,093
  20,898
  25,189
  29,970
  35,239
  40,992
  47,219
  53,911
  61,057
  68,646
  76,669
  85,116
  93,982
  103,262
  112,955
  123,063
  133,590
  144,542
  155,929
  167,765
Revenue / Adjusted assets
  0.236
  0.235
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
Average production assets, $m
  145
  231
  357
  534
  775
  1,094
  1,504
  2,018
  2,650
  3,410
  4,308
  5,349
  6,540
  7,882
  9,379
  11,028
  12,828
  14,776
  16,871
  19,107
  21,482
  23,992
  26,636
  29,410
  32,314
  35,348
  38,511
  41,805
  45,232
  48,796
  52,500
Working capital, $m
  -64
  13
  20
  29
  43
  60
  83
  111
  146
  188
  237
  294
  360
  434
  516
  607
  706
  813
  929
  1,052
  1,183
  1,321
  1,466
  1,619
  1,779
  1,946
  2,120
  2,301
  2,490
  2,686
  2,890
Total debt, $m
  242
  173
  278
  425
  625
  890
  1,230
  1,658
  2,183
  2,814
  3,560
  4,425
  5,414
  6,530
  7,773
  9,143
  10,639
  12,258
  13,998
  15,856
  17,829
  19,915
  22,111
  24,416
  26,829
  29,349
  31,977
  34,714
  37,562
  40,523
  43,600
Total liabilities, $m
  260
  192
  297
  444
  644
  909
  1,249
  1,677
  2,202
  2,833
  3,579
  4,444
  5,433
  6,549
  7,792
  9,162
  10,658
  12,277
  14,017
  15,875
  17,848
  19,934
  22,130
  24,435
  26,848
  29,368
  31,996
  34,733
  37,581
  40,542
  43,619
Total equity, $m
  341
  547
  845
  1,264
  1,833
  2,587
  3,556
  4,773
  6,267
  8,064
  10,186
  12,649
  15,464
  18,640
  22,178
  26,077
  30,334
  34,942
  39,894
  45,182
  50,798
  56,735
  62,986
  69,546
  76,414
  83,587
  91,067
  98,856
  106,961
  115,388
  124,146
Total liabilities and equity, $m
  601
  739
  1,142
  1,708
  2,477
  3,496
  4,805
  6,450
  8,469
  10,897
  13,765
  17,093
  20,897
  25,189
  29,970
  35,239
  40,992
  47,219
  53,911
  61,057
  68,646
  76,669
  85,116
  93,981
  103,262
  112,955
  123,063
  133,589
  144,542
  155,930
  167,765
Debt-to-equity ratio
  0.710
  0.320
  0.330
  0.340
  0.340
  0.340
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
Adjusted equity ratio
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  100
  157
  237
  345
  488
  672
  903
  1,187
  1,527
  1,929
  2,400
  2,933
  3,533
  4,201
  4,938
  5,741
  6,611
  7,545
  8,542
  9,601
  10,720
  11,898
  13,134
  14,427
  15,779
  17,188
  18,655
  20,181
  21,768
  23,418
Depreciation, amort., depletion, $m
  11
  21
  28
  39
  53
  72
  96
  126
  163
  208
  261
  315
  385
  464
  552
  649
  755
  869
  992
  1,124
  1,264
  1,411
  1,567
  1,730
  1,901
  2,079
  2,265
  2,459
  2,661
  2,870
  3,088
Funds from operations, $m
  52
  121
  185
  275
  398
  560
  768
  1,029
  1,350
  1,735
  2,190
  2,715
  3,318
  3,997
  4,753
  5,586
  6,496
  7,480
  8,537
  9,666
  10,864
  12,131
  13,464
  14,864
  16,328
  17,858
  19,453
  21,114
  22,842
  24,639
  26,506
Change in working capital, $m
  -11
  5
  7
  10
  13
  18
  23
  28
  35
  42
  49
  57
  66
  74
  82
  91
  99
  107
  115
  123
  131
  138
  146
  153
  160
  167
  174
  181
  189
  196
  204
Cash from operations, $m
  63
  203
  178
  265
  385
  542
  745
  1,001
  1,315
  1,693
  2,140
  2,658
  3,252
  3,923
  4,671
  5,496
  6,397
  7,373
  8,422
  9,543
  10,734
  11,993
  13,319
  14,711
  16,168
  17,691
  19,279
  20,933
  22,653
  24,442
  26,302
Maintenance CAPEX, $m
  0
  -9
  -14
  -21
  -31
  -46
  -64
  -88
  -119
  -156
  -201
  -253
  -315
  -385
  -464
  -552
  -649
  -755
  -869
  -992
  -1,124
  -1,264
  -1,411
  -1,567
  -1,730
  -1,901
  -2,079
  -2,265
  -2,459
  -2,661
  -2,870
New CAPEX, $m
  -20
  -87
  -126
  -177
  -241
  -319
  -410
  -515
  -632
  -760
  -897
  -1,041
  -1,191
  -1,343
  -1,496
  -1,649
  -1,800
  -1,949
  -2,094
  -2,236
  -2,375
  -2,511
  -2,643
  -2,774
  -2,904
  -3,033
  -3,163
  -3,294
  -3,427
  -3,564
  -3,704
Cash from investing activities, $m
  -143
  -96
  -140
  -198
  -272
  -365
  -474
  -603
  -751
  -916
  -1,098
  -1,294
  -1,506
  -1,728
  -1,960
  -2,201
  -2,449
  -2,704
  -2,963
  -3,228
  -3,499
  -3,775
  -4,054
  -4,341
  -4,634
  -4,934
  -5,242
  -5,559
  -5,886
  -6,225
  -6,574
Free cash flow, $m
  -80
  108
  38
  67
  112
  178
  271
  398
  565
  777
  1,043
  1,363
  1,747
  2,195
  2,711
  3,295
  3,948
  4,669
  5,458
  6,314
  7,235
  8,218
  9,264
  10,370
  11,534
  12,757
  14,036
  15,373
  16,767
  18,218
  19,728
Issuance/(repayment) of debt, $m
  0
  72
  105
  147
  200
  265
  341
  428
  525
  631
  745
  865
  989
  1,116
  1,243
  1,370
  1,496
  1,619
  1,740
  1,858
  1,973
  2,086
  2,196
  2,305
  2,413
  2,520
  2,628
  2,737
  2,848
  2,961
  3,077
Issuance/(repurchase) of shares, $m
  3
  26
  155
  204
  257
  310
  358
  392
  405
  388
  334
  234
  80
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2
  98
  260
  351
  457
  575
  699
  820
  930
  1,019
  1,079
  1,099
  1,069
  1,116
  1,243
  1,370
  1,496
  1,619
  1,740
  1,858
  1,973
  2,086
  2,196
  2,305
  2,413
  2,520
  2,628
  2,737
  2,848
  2,961
  3,077
Total cash flow (excl. dividends), $m
  -79
  180
  143
  214
  312
  443
  612
  826
  1,090
  1,409
  1,788
  2,228
  2,736
  3,311
  3,954
  4,665
  5,444
  6,288
  7,198
  8,172
  9,208
  10,304
  11,460
  12,675
  13,947
  15,277
  16,664
  18,110
  19,614
  21,179
  22,805
Retained Cash Flow (-), $m
  -104
  -206
  -298
  -419
  -570
  -753
  -969
  -1,217
  -1,494
  -1,797
  -2,122
  -2,463
  -2,816
  -3,175
  -3,538
  -3,899
  -4,257
  -4,608
  -4,952
  -5,288
  -5,616
  -5,937
  -6,251
  -6,561
  -6,867
  -7,173
  -7,480
  -7,789
  -8,104
  -8,427
  -8,759
Prev. year cash balance 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
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
  136
  416
  766
  1,187
  1,680
  2,246
  2,884
  3,592
  4,368
  5,209
  6,114
  7,080
  8,104
  9,185
  10,320
  11,510
  12,752
  14,047
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
  52
  140
  225
  302
  366
  414
  444
  456
  452
  432
  401
  361
  315
  268
  222
  178
  139
  106
Current shareholders' claim on cash, %
  100
  98.9
  94.7
  91.3
  88.5
  86.2
  84.4
  83.0
  81.9
  81.1
  80.6
  80.3
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2
  80.2

Ligand Pharmaceuticals Incorporated, a biopharmaceutical company, focuses on developing and acquiring technologies that help pharmaceutical companies discover and develop medicines worldwide. Its commercial programs include Promacta, an oral medicine that increases the number of platelets in the blood; Kyprolis that is used for the treatment of multiple myeloma; bazedoxifene, which is used for the treatment of postmenopausal osteoporosis; Nexterone, a Captisol-enabled formulation of amiodarone; Noxafil-IV, a Captisol-enabled formulation of posaconazole for IV use; Exemptia for autoimmune diseases; and Vivitra for breast cancer. The company’s partners programs, which are in clinical development used for the treatment of seizure, coma, cancer, diabetes, cardiovascular disease, muscle wasting, liver disease, kidney disease, and others. Its internal development program comprise products for the treatment of Type 2 diabetes mellitus, blood disorders, anti-coagulant, pain, depression, allergy, sun damage, restless leg/parkinson's, cognitive disorders, oncology, and inflammation. The company is also involved in the sale of Captisol materials. Ligand Pharmaceuticals Incorporated has alliances, licenses, and other business relationships with various pharmaceutical companies, including Novartis, Amgen, Inc, Merck & Co., Inc., Pfizer Inc., Celgene, Gilead, Janssen, Baxter International, Inc., and Eli Lilly and Company. The company was founded in 1987 and is headquartered in La Jolla, California.

FINANCIAL RATIOS  of  Ligand Pharmaceuticals (LGND)

Valuation Ratios
P/E Ratio -1091.4
Price to Sales 20
Price to Book 6.4
Price to Tangible Book
Price to Cash Flow 34.6
Price to Free Cash Flow 50.8
Growth Rates
Sales Growth Rate 51.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 400%
Cap. Spend. - 3 Yr. Gr. Rate 38%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 8.5%
Total Debt to Equity 71%
Interest Coverage 5
Management Effectiveness
Return On Assets -0.5%
Ret/ On Assets - 3 Yr. Avg. 23.3%
Return On Total Capital -0.4%
Ret/ On T. Cap. - 3 Yr. Avg. 24.4%
Return On Equity -0.7%
Return On Equity - 3 Yr. Avg. 68.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 94.5%
Gross Margin - 3 Yr. Avg. 90.3%
EBITDA Margin 19.3%
EBITDA Margin - 3 Yr. Avg. 32.1%
Operating Margin 40.4%
Oper. Margin - 3 Yr. Avg. 49.6%
Pre-Tax Margin 7.3%
Pre-Tax Margin - 3 Yr. Avg. 24.3%
Net Profit Margin -1.8%
Net Profit Margin - 3 Yr. Avg. 112%
Effective Tax Rate 125%
Eff/ Tax Rate - 3 Yr. Avg. -141.2%
Payout Ratio 0%

LGND stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LGND stock intrinsic value calculation we used $109 million for the last fiscal year's total revenue generated by Ligand Pharmaceuticals. The default revenue input number comes from 2016 income statement of Ligand Pharmaceuticals. 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 LGND 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 LGND is calculated based on our internal credit rating of Ligand Pharmaceuticals, 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 Ligand Pharmaceuticals.
    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 LGND stock the variable cost ratio is equal to 22%.

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 LGND 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 Ligand Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Ligand Pharmaceuticals. 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 LGND 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 LGND are equal to 132.6%.

Life of production assets of 17 years is the average useful life of capital assets used in Ligand Pharmaceuticals 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 LGND is equal to 7.3%. 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 - $341 million for Ligand Pharmaceuticals - 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 21.07 million for Ligand Pharmaceuticals 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 Ligand Pharmaceuticals at the current share price and the inputted number of shares is $2.2 billion.


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COMPANY NEWS

▶ Ligand to Report First Quarter 2017 Results on May 9th   [Apr-13-17 09:00AM  Business Wire]
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Stock chart of LGND Financial statements of LGND
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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