Intrinsic value of Lantheus Holdings - LNTH

Previous Close

$17.55

  Intrinsic Value

$0.75

stock screener

  Rating & Target

str. sell

-96%

  Value-price divergence*

-111%

Previous close

$17.55

 
Intrinsic value

$0.75

 
Up/down potential

-96%

 
Rating

str. sell

 
Value-price divergence*

-111%

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

We calculate the intrinsic value of LNTH 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 0.7

 

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, %
  3.07
  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
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
  5.43
Revenue, $m
  302
  345
  390
  438
  489
  543
  599
  658
  720
  784
  851
  920
  993
  1,068
  1,146
  1,227
  1,311
  1,399
  1,490
  1,585
  1,684
  1,787
  1,894
  2,005
  2,122
  2,243
  2,370
  2,503
  2,641
  2,786
  2,937
Variable operating expenses, $m
 
  312
  353
  397
  443
  491
  542
  595
  651
  708
  769
  830
  895
  963
  1,033
  1,106
  1,182
  1,262
  1,344
  1,429
  1,518
  1,611
  1,708
  1,808
  1,913
  2,023
  2,137
  2,257
  2,381
  2,512
  2,648
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
  247
  312
  353
  397
  443
  491
  542
  595
  651
  708
  769
  830
  895
  963
  1,033
  1,106
  1,182
  1,262
  1,344
  1,429
  1,518
  1,611
  1,708
  1,808
  1,913
  2,023
  2,137
  2,257
  2,381
  2,512
  2,648
Operating income, $m
  55
  32
  37
  41
  46
  52
  57
  63
  69
  75
  82
  90
  98
  105
  113
  121
  129
  138
  146
  156
  166
  176
  186
  197
  209
  221
  233
  246
  260
  274
  289
EBITDA, $m
  73
  52
  59
  66
  74
  82
  90
  99
  108
  118
  128
  138
  149
  160
  172
  184
  197
  210
  224
  238
  253
  268
  285
  301
  319
  337
  356
  376
  397
  419
  441
Interest expense (income), $m
  24
  21
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  36
  40
  43
  47
  51
  54
  59
  63
  67
  72
  77
  81
  87
  92
  98
  104
  110
  116
  123
Earnings before tax, $m
  28
  11
  27
  30
  33
  36
  39
  42
  45
  48
  52
  57
  61
  65
  70
  74
  78
  83
  88
  93
  98
  104
  110
  116
  122
  128
  135
  142
  150
  158
  166
Tax expense, $m
  1
  3
  7
  8
  9
  10
  10
  11
  12
  13
  14
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  38
  40
  43
  45
Net income, $m
  27
  8
  20
  22
  24
  26
  28
  30
  33
  35
  38
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  109
  115
  121

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  51
  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
  256
  234
  265
  298
  332
  369
  407
  447
  489
  532
  578
  625
  674
  725
  778
  833
  890
  950
  1,012
  1,076
  1,143
  1,213
  1,286
  1,361
  1,441
  1,523
  1,609
  1,699
  1,793
  1,891
  1,994
Adjusted assets (=assets-cash), $m
  205
  234
  265
  298
  332
  369
  407
  447
  489
  532
  578
  625
  674
  725
  778
  833
  890
  950
  1,012
  1,076
  1,143
  1,213
  1,286
  1,361
  1,441
  1,523
  1,609
  1,699
  1,793
  1,891
  1,994
Revenue / Adjusted assets
  1.473
  1.474
  1.472
  1.470
  1.473
  1.472
  1.472
  1.472
  1.472
  1.474
  1.472
  1.472
  1.473
  1.473
  1.473
  1.473
  1.473
  1.473
  1.472
  1.473
  1.473
  1.473
  1.473
  1.473
  1.473
  1.473
  1.473
  1.473
  1.473
  1.473
  1.473
Average production assets, $m
  113
  129
  146
  164
  183
  203
  224
  246
  269
  293
  318
  344
  371
  399
  429
  459
  490
  523
  557
  593
  630
  668
  708
  750
  794
  839
  886
  936
  988
  1,042
  1,098
Working capital, $m
  67
  23
  26
  29
  32
  36
  40
  43
  48
  52
  56
  61
  66
  70
  76
  81
  87
  92
  98
  105
  111
  118
  125
  132
  140
  148
  156
  165
  174
  184
  194
Total debt, $m
  278
  126
  153
  183
  214
  247
  281
  317
  355
  394
  435
  477
  521
  567
  615
  665
  716
  770
  826
  883
  944
  1,007
  1,072
  1,140
  1,211
  1,286
  1,363
  1,444
  1,529
  1,617
  1,709
Total liabilities, $m
  362
  211
  238
  268
  299
  332
  366
  402
  440
  479
  520
  562
  606
  652
  700
  750
  801
  855
  911
  968
  1,029
  1,092
  1,157
  1,225
  1,296
  1,371
  1,448
  1,529
  1,614
  1,702
  1,794
Total equity, $m
  -107
  23
  26
  30
  33
  37
  41
  45
  49
  53
  58
  62
  67
  72
  78
  83
  89
  95
  101
  108
  114
  121
  129
  136
  144
  152
  161
  170
  179
  189
  199
Total liabilities and equity, $m
  255
  234
  264
  298
  332
  369
  407
  447
  489
  532
  578
  624
  673
  724
  778
  833
  890
  950
  1,012
  1,076
  1,143
  1,213
  1,286
  1,361
  1,440
  1,523
  1,609
  1,699
  1,793
  1,891
  1,993
Debt-to-equity ratio
  -2.598
  5.370
  5.790
  6.140
  6.440
  6.690
  6.910
  7.100
  7.260
  7.400
  7.530
  7.640
  7.740
  7.830
  7.910
  7.980
  8.050
  8.110
  8.160
  8.210
  8.260
  8.300
  8.340
  8.380
  8.410
  8.440
  8.470
  8.500
  8.530
  8.550
  8.570
Adjusted equity ratio
  -0.771
  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
  27
  8
  20
  22
  24
  26
  28
  30
  33
  35
  38
  42
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  109
  115
  121
Depreciation, amort., depletion, $m
  18
  19
  22
  24
  27
  30
  33
  36
  39
  42
  46
  48
  52
  55
  60
  64
  68
  73
  77
  82
  87
  93
  98
  104
  110
  117
  123
  130
  137
  145
  153
Funds from operations, $m
  53
  28
  42
  46
  51
  56
  61
  66
  72
  78
  84
  90
  96
  103
  110
  118
  125
  133
  142
  150
  159
  169
  178
  189
  199
  210
  222
  234
  247
  260
  274
Change in working capital, $m
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
Cash from operations, $m
  50
  25
  39
  43
  47
  52
  57
  62
  68
  73
  79
  85
  92
  98
  105
  112
  120
  128
  136
  144
  153
  162
  171
  181
  192
  202
  213
  225
  237
  250
  264
Maintenance CAPEX, $m
  0
  -16
  -18
  -20
  -23
  -25
  -28
  -31
  -34
  -37
  -41
  -44
  -48
  -52
  -55
  -60
  -64
  -68
  -73
  -77
  -82
  -87
  -93
  -98
  -104
  -110
  -117
  -123
  -130
  -137
  -145
New CAPEX, $m
  -7
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -45
  -47
  -50
  -52
  -54
  -57
Cash from investing activities, $m
  3
  -32
  -35
  -38
  -42
  -45
  -49
  -53
  -57
  -61
  -66
  -70
  -75
  -80
  -84
  -90
  -96
  -101
  -107
  -112
  -119
  -125
  -133
  -140
  -148
  -155
  -164
  -173
  -182
  -191
  -202
Free cash flow, $m
  53
  -7
  4
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  20
  22
  24
  27
  29
  31
  33
  36
  38
  41
  44
  47
  50
  53
  56
  59
  62
Issuance/(repayment) of debt, $m
  -79
  -148
  28
  29
  31
  33
  34
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  77
  81
  85
  88
  92
Issuance/(repurchase) of shares, $m
  51
  169
  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  
  -30
  21
  28
  29
  31
  33
  34
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  77
  81
  85
  88
  92
Total cash flow (excl. dividends), $m
  23
  14
  32
  34
  37
  39
  42
  45
  48
  51
  55
  57
  61
  64
  68
  72
  76
  80
  85
  89
  94
  99
  104
  109
  115
  121
  127
  133
  140
  147
  155
Retained Cash Flow (-), $m
  -78
  -177
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
Prev. year cash balance distribution, $m
 
  47
  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
 
  -116
  29
  31
  33
  36
  38
  41
  44
  47
  50
  53
  56
  59
  63
  67
  70
  74
  78
  83
  87
  92
  97
  102
  107
  113
  118
  124
  131
  138
  144
Discount rate, %
 
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.71
  24.89
  26.14
  27.44
  28.81
  30.25
  31.77
  33.36
  35.02
  36.77
  38.61
  40.54
  42.57
  44.70
  46.93
  49.28
  51.75
  54.33
PV of cash for distribution, $m
 
  -103
  22
  21
  19
  17
  15
  13
  11
  9
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Lantheus Holdings, Inc. is engaged in the development, manufacture and commercialization of diagnostic medical imaging agents and products that assist clinicians in the diagnosis and treatment of cardiovascular and other diseases. Its imaging agents and products are used across a range of imaging modalities, including echocardiography and nuclear imaging. It operates in two segments: U.S. Segment and International Segment. The U.S. Segment produces and markets its medical imaging agents and products throughout the United States. In the United States, it sells its products to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices. The International Segment operations consist of production and distribution activities in Puerto Rico and direct distribution activities in Canada. Its portfolio of nine commercial products is diversified across a range of imaging modalities. Its products include an ultrasound contrast agent and medical radiopharmaceuticals.

FINANCIAL RATIOS  of  Lantheus Holdings (LNTH)

Valuation Ratios
P/E Ratio 23.9
Price to Sales 2.1
Price to Book -6
Price to Tangible Book
Price to Cash Flow 12.9
Price to Free Cash Flow 15
Growth Rates
Sales Growth Rate 3.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -46.2%
Cap. Spend. - 3 Yr. Gr. Rate 7%
Financial Strength
Quick Ratio 13
Current Ratio 0.1
LT Debt to Equity -256.1%
Total Debt to Equity -259.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 20.1%
Ret/ On Assets - 3 Yr. Avg. 21.5%
Return On Total Capital 15.9%
Ret/ On T. Cap. - 3 Yr. Avg. 1.5%
Return On Equity -18.5%
Return On Equity - 3 Yr. Avg. -3.2%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 45.7%
Gross Margin - 3 Yr. Avg. 44.6%
EBITDA Margin 23.2%
EBITDA Margin - 3 Yr. Avg. 19.4%
Operating Margin 18.2%
Oper. Margin - 3 Yr. Avg. 13.6%
Pre-Tax Margin 9.3%
Pre-Tax Margin - 3 Yr. Avg. 1.5%
Net Profit Margin 8.9%
Net Profit Margin - 3 Yr. Avg. 0.8%
Effective Tax Rate 3.6%
Eff/ Tax Rate - 3 Yr. Avg. -40.5%
Payout Ratio 0%

LNTH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LNTH stock intrinsic value calculation we used $302 million for the last fiscal year's total revenue generated by Lantheus Holdings. The default revenue input number comes from 2016 income statement of Lantheus Holdings. 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 LNTH stock valuation model: a) initial revenue growth rate of 14.1% 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 13.2%, whose default value for LNTH is calculated based on our internal credit rating of Lantheus Holdings, 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 Lantheus Holdings.
    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 LNTH stock the variable cost ratio is equal to 90.7%.

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 LNTH 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 7.6% for Lantheus Holdings.

Corporate tax rate of 27% is the nominal tax rate for Lantheus Holdings. 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 LNTH 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 LNTH are equal to 37.4%.

Life of production assets of 7.2 years is the average useful life of capital assets used in Lantheus Holdings 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 LNTH is equal to 6.6%. 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 - $-107 million for Lantheus Holdings - 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 37.57 million for Lantheus Holdings 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 Lantheus Holdings at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

Financial statements of LNTH
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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