Intrinsic value of Myriad Genetics - MYGN

Previous Close

$43.71

  Intrinsic Value

$31.02

stock screener

  Rating & Target

sell

-29%

Previous close

$43.71

 
Intrinsic value

$31.02

 
Up/down potential

-29%

 
Rating

sell

We calculate the intrinsic value of MYGN 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.25
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
Revenue, $m
  771
  789
  809
  832
  857
  885
  915
  947
  983
  1,020
  1,061
  1,104
  1,149
  1,198
  1,250
  1,305
  1,363
  1,424
  1,489
  1,557
  1,629
  1,705
  1,786
  1,870
  1,959
  2,053
  2,152
  2,255
  2,365
  2,480
  2,600
Variable operating expenses, $m
 
  613
  626
  642
  659
  677
  698
  720
  743
  769
  796
  744
  775
  808
  843
  880
  919
  960
  1,004
  1,050
  1,098
  1,150
  1,204
  1,261
  1,321
  1,384
  1,451
  1,521
  1,594
  1,672
  1,753
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
  722
  613
  626
  642
  659
  677
  698
  720
  743
  769
  796
  744
  775
  808
  843
  880
  919
  960
  1,004
  1,050
  1,098
  1,150
  1,204
  1,261
  1,321
  1,384
  1,451
  1,521
  1,594
  1,672
  1,753
Operating income, $m
  49
  176
  183
  190
  198
  207
  217
  228
  239
  252
  265
  360
  374
  390
  407
  425
  444
  464
  485
  507
  531
  556
  582
  609
  638
  669
  701
  735
  770
  808
  847
EBITDA, $m
  97
  325
  334
  343
  354
  365
  377
  391
  405
  421
  438
  455
  474
  494
  516
  538
  562
  587
  614
  642
  672
  704
  737
  772
  808
  847
  888
  931
  976
  1,023
  1,073
Interest expense (income), $m
  0
  12
  13
  15
  16
  18
  20
  22
  24
  27
  29
  32
  35
  38
  42
  45
  49
  53
  58
  62
  67
  72
  77
  83
  89
  95
  101
  108
  116
  123
  131
Earnings before tax, $m
  43
  164
  170
  176
  182
  190
  197
  206
  215
  225
  235
  327
  339
  352
  365
  380
  395
  411
  427
  445
  464
  484
  505
  526
  550
  574
  599
  626
  655
  685
  716
Tax expense, $m
  21
  44
  46
  47
  49
  51
  53
  56
  58
  61
  64
  88
  92
  95
  99
  103
  107
  111
  115
  120
  125
  131
  136
  142
  148
  155
  162
  169
  177
  185
  193
Net income, $m
  22
  120
  124
  128
  133
  138
  144
  150
  157
  164
  172
  239
  248
  257
  267
  277
  288
  300
  312
  325
  339
  353
  368
  384
  401
  419
  438
  457
  478
  500
  523

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  151
  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
  1,224
  1,252
  1,284
  1,320
  1,360
  1,404
  1,452
  1,504
  1,560
  1,619
  1,683
  1,752
  1,825
  1,902
  1,984
  2,071
  2,163
  2,260
  2,363
  2,472
  2,586
  2,707
  2,834
  2,968
  3,110
  3,259
  3,415
  3,580
  3,753
  3,936
  4,128
Adjusted assets (=assets-cash), $m
  1,073
  1,252
  1,284
  1,320
  1,360
  1,404
  1,452
  1,504
  1,560
  1,619
  1,683
  1,752
  1,825
  1,902
  1,984
  2,071
  2,163
  2,260
  2,363
  2,472
  2,586
  2,707
  2,834
  2,968
  3,110
  3,259
  3,415
  3,580
  3,753
  3,936
  4,128
Revenue / Adjusted assets
  0.719
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
Average production assets, $m
  415
  685
  702
  722
  744
  768
  794
  822
  853
  886
  921
  958
  998
  1,040
  1,085
  1,132
  1,183
  1,236
  1,292
  1,352
  1,414
  1,480
  1,550
  1,623
  1,701
  1,782
  1,868
  1,958
  2,052
  2,152
  2,257
Working capital, $m
  99
  21
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
  53
  56
  59
  61
  64
  68
Total debt, $m
  99
  108
  120
  133
  148
  164
  181
  200
  220
  242
  265
  290
  317
  345
  375
  406
  440
  475
  513
  552
  594
  638
  684
  733
  785
  839
  896
  956
  1,019
  1,085
  1,155
Total liabilities, $m
  446
  456
  467
  481
  495
  511
  529
  547
  568
  589
  613
  638
  664
  692
  722
  754
  787
  823
  860
  900
  941
  985
  1,032
  1,081
  1,132
  1,186
  1,243
  1,303
  1,366
  1,433
  1,502
Total equity, $m
  778
  796
  817
  840
  865
  893
  923
  956
  992
  1,030
  1,071
  1,114
  1,160
  1,210
  1,262
  1,317
  1,376
  1,437
  1,503
  1,572
  1,645
  1,722
  1,803
  1,888
  1,978
  2,072
  2,172
  2,277
  2,387
  2,503
  2,625
Total liabilities and equity, $m
  1,224
  1,252
  1,284
  1,321
  1,360
  1,404
  1,452
  1,503
  1,560
  1,619
  1,684
  1,752
  1,824
  1,902
  1,984
  2,071
  2,163
  2,260
  2,363
  2,472
  2,586
  2,707
  2,835
  2,969
  3,110
  3,258
  3,415
  3,580
  3,753
  3,936
  4,127
Debt-to-equity ratio
  0.127
  0.140
  0.150
  0.160
  0.170
  0.180
  0.200
  0.210
  0.220
  0.240
  0.250
  0.260
  0.270
  0.290
  0.300
  0.310
  0.320
  0.330
  0.340
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.400
  0.410
  0.420
  0.430
  0.430
  0.440
Adjusted equity ratio
  0.584
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  22
  120
  124
  128
  133
  138
  144
  150
  157
  164
  172
  239
  248
  257
  267
  277
  288
  300
  312
  325
  339
  353
  368
  384
  401
  419
  438
  457
  478
  500
  523
Depreciation, amort., depletion, $m
  48
  149
  151
  153
  155
  158
  160
  163
  166
  169
  173
  96
  100
  104
  108
  113
  118
  124
  129
  135
  141
  148
  155
  162
  170
  178
  187
  196
  205
  215
  226
Funds from operations, $m
  69
  269
  275
  281
  288
  296
  304
  313
  323
  334
  345
  335
  348
  361
  375
  390
  406
  423
  441
  460
  480
  501
  523
  547
  571
  597
  624
  653
  683
  715
  748
Change in working capital, $m
  -37
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
Cash from operations, $m
  106
  269
  274
  281
  288
  295
  304
  313
  322
  333
  344
  334
  346
  360
  374
  389
  405
  422
  440
  458
  478
  499
  521
  544
  569
  595
  622
  650
  680
  712
  745
Maintenance CAPEX, $m
  0
  -67
  -68
  -70
  -72
  -74
  -77
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -104
  -108
  -113
  -118
  -124
  -129
  -135
  -141
  -148
  -155
  -162
  -170
  -178
  -187
  -196
  -205
  -215
New CAPEX, $m
  -6
  -15
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -33
  -35
  -37
  -40
  -42
  -45
  -48
  -50
  -53
  -56
  -59
  -63
  -66
  -70
  -73
  -77
  -81
  -86
  -90
  -95
  -100
  -105
Cash from investing activities, $m
  -146
  -82
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -118
  -124
  -129
  -136
  -142
  -149
  -156
  -163
  -171
  -180
  -188
  -198
  -207
  -218
  -228
  -239
  -251
  -264
  -277
  -291
  -305
  -320
Free cash flow, $m
  -40
  187
  188
  191
  194
  197
  201
  205
  209
  215
  220
  204
  211
  218
  225
  233
  241
  250
  260
  270
  280
  292
  304
  316
  329
  343
  358
  373
  390
  407
  425
Issuance/(repayment) of debt, $m
  98
  9
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  33
  35
  37
  40
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
Issuance/(repurchase) of shares, $m
  -26
  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  
  72
  9
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  33
  35
  37
  40
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
Total cash flow (excl. dividends), $m
  34
  196
  200
  204
  208
  213
  218
  224
  230
  236
  243
  229
  237
  246
  255
  265
  275
  286
  297
  309
  322
  336
  350
  365
  381
  397
  415
  433
  453
  473
  495
Retained Cash Flow (-), $m
  -30
  -18
  -20
  -23
  -25
  -28
  -30
  -33
  -35
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -59
  -62
  -65
  -69
  -73
  -77
  -81
  -85
  -90
  -95
  -100
  -105
  -110
  -116
  -122
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
 
  30
  31
  32
  32
  33
  35
  36
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  97
Cash available for distribution, $m
 
  178
  180
  181
  183
  185
  188
  191
  194
  198
  203
  186
  191
  197
  203
  209
  216
  224
  232
  240
  249
  259
  269
  280
  291
  303
  315
  329
  343
  357
  373
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
 
  171
  164
  157
  150
  143
  136
  129
  121
  114
  106
  88
  81
  75
  68
  61
  55
  49
  43
  37
  32
  27
  22
  18
  15
  12
  9
  7
  5
  4
  3
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

Myriad Genetics, Inc. is a molecular diagnostic company. The Company is engaged in the discovery, development and marketing of transformative molecular diagnostic tests. The Company operates through two segments: diagnostics and other. The diagnostics segment provides testing and collaborative development of testing that is designed to assess an individual's risk for developing disease later in life, identify a patient's likelihood of responding to drug therapy and guide a patient's dosing to enable optimal treatment, or assess a patient's risk of disease progression and disease recurrence. The other segment provides testing products and services to the pharmaceutical, biotechnology and medical research industries, research and development, and clinical services for patients, and also includes corporate services, such as finance, human resources, legal and information technology. Its molecular diagnostic tests include myRisk Hereditary Cancer, BRACAnalysis CDx and COLARIS.

FINANCIAL RATIOS  of  Myriad Genetics (MYGN)

Valuation Ratios
P/E Ratio 135.9
Price to Sales 3.9
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 28.2
Price to Free Cash Flow 29.9
Growth Rates
Sales Growth Rate 2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate -15.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 12.7%
Total Debt to Equity 12.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.1%
Ret/ On Assets - 3 Yr. Avg. 9.1%
Return On Total Capital 2.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10.7%
Return On Equity 2.9%
Return On Equity - 3 Yr. Avg. 10.7%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 77.8%
Gross Margin - 3 Yr. Avg. 78.9%
EBITDA Margin 11.8%
EBITDA Margin - 3 Yr. Avg. 20%
Operating Margin 6.4%
Oper. Margin - 3 Yr. Avg. 15.7%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. 15.6%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 10.2%
Effective Tax Rate 48.8%
Eff/ Tax Rate - 3 Yr. Avg. 38.5%
Payout Ratio 0%

MYGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MYGN stock intrinsic value calculation we used $771 million for the last fiscal year's total revenue generated by Myriad Genetics. The default revenue input number comes from 2017 income statement of Myriad Genetics. 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 MYGN stock valuation model: a) initial revenue growth rate of 2.3% 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 MYGN is calculated based on our internal credit rating of Myriad Genetics, 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 Myriad Genetics.
    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 MYGN stock the variable cost ratio is equal to 77.9%.

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 MYGN 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 12.1% for Myriad Genetics.

Corporate tax rate of 27% is the nominal tax rate for Myriad Genetics. 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 MYGN stock is equal to 3.9%.

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 MYGN are equal to 86.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Myriad Genetics 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 MYGN is equal to 2.6%. 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 - $778 million for Myriad Genetics - 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 68 million for Myriad Genetics 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 Myriad Genetics at the current share price and the inputted number of shares is $3.0 billion.

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COMPANY NEWS

▶ Why Myriad Genetics Stock Soared Today   [02:02PM  Motley Fool]
Financial statements of MYGN
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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