Intrinsic value of NanoString Technologies - NSTG

Previous Close

$7.00

  Intrinsic Value

$0.12

stock screener

  Rating & Target

str. sell

-98%

Previous close

$7.00

 
Intrinsic value

$0.12

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of NSTG 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
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, %
  36.51
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.35
  7.12
  6.91
  6.72
  6.54
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
Revenue, $m
  86
  97
  108
  120
  133
  146
  160
  174
  189
  204
  221
  237
  255
  273
  292
  311
  332
  353
  375
  398
  422
  447
  473
  500
  528
  558
  589
  621
  655
  690
  727
Variable operating expenses, $m
 
  101
  113
  126
  139
  153
  167
  182
  198
  214
  231
  248
  267
  286
  305
  326
  347
  370
  393
  417
  442
  468
  495
  524
  553
  584
  616
  650
  686
  723
  761
Fixed operating expenses, $m
 
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
  54
  55
  56
  58
  59
  61
  62
  64
  66
  67
  69
  71
  72
  74
  76
  78
  80
  82
Total operating expenses, $m
  128
  141
  154
  168
  182
  197
  212
  228
  246
  263
  281
  299
  319
  340
  360
  382
  405
  429
  454
  479
  506
  534
  562
  593
  624
  656
  690
  726
  764
  803
  843
Operating income, $m
  -41
  -45
  -46
  -48
  -49
  -51
  -53
  -55
  -56
  -58
  -60
  -62
  -64
  -67
  -69
  -71
  -73
  -76
  -78
  -81
  -84
  -87
  -89
  -92
  -95
  -99
  -102
  -105
  -109
  -112
  -116
EBITDA, $m
  -38
  -42
  -43
  -45
  -46
  -47
  -49
  -50
  -52
  -53
  -55
  -56
  -58
  -60
  -61
  -63
  -65
  -67
  -69
  -71
  -73
  -75
  -77
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -97
Interest expense (income), $m
  4
  4
  -1
  -1
  0
  0
  1
  2
  3
  3
  4
  5
  6
  7
  7
  8
  9
  10
  11
  12
  14
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
Earnings before tax, $m
  -47
  -49
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -97
  -101
  -105
  -110
  -114
  -119
  -123
  -128
  -133
  -139
  -144
Tax expense, $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
  0
Net income, $m
  -47
  -49
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -97
  -101
  -105
  -110
  -114
  -119
  -123
  -128
  -133
  -139
  -144

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  74
  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
  126
  58
  65
  73
  80
  88
  96
  105
  114
  124
  133
  143
  154
  165
  176
  188
  201
  213
  227
  241
  255
  270
  286
  302
  319
  337
  356
  376
  396
  417
  440
Adjusted assets (=assets-cash), $m
  52
  58
  65
  73
  80
  88
  96
  105
  114
  124
  133
  143
  154
  165
  176
  188
  201
  213
  227
  241
  255
  270
  286
  302
  319
  337
  356
  376
  396
  417
  440
Revenue / Adjusted assets
  1.654
  1.672
  1.662
  1.644
  1.663
  1.659
  1.667
  1.657
  1.658
  1.645
  1.662
  1.657
  1.656
  1.655
  1.659
  1.654
  1.652
  1.657
  1.652
  1.651
  1.655
  1.656
  1.654
  1.656
  1.655
  1.656
  1.654
  1.652
  1.654
  1.655
  1.652
Average production assets, $m
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  61
  64
  68
  71
  75
  79
  84
  88
  93
Working capital, $m
  78
  5
  5
  6
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
Total debt, $m
  47
  -14
  -8
  -2
  5
  12
  20
  28
  36
  44
  53
  62
  72
  82
  92
  102
  114
  125
  137
  150
  163
  176
  190
  205
  220
  237
  253
  271
  289
  309
  329
Total liabilities, $m
  114
  53
  59
  65
  72
  79
  87
  95
  103
  111
  120
  129
  139
  149
  159
  169
  181
  192
  204
  217
  230
  243
  257
  272
  287
  304
  320
  338
  356
  376
  396
Total equity, $m
  12
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  17
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  44
Total liabilities and equity, $m
  126
  59
  66
  72
  80
  88
  97
  106
  114
  123
  133
  143
  154
  166
  177
  188
  201
  213
  227
  241
  256
  270
  286
  302
  319
  338
  356
  376
  396
  418
  440
Debt-to-equity ratio
  3.917
  -2.450
  -1.250
  -0.230
  0.650
  1.400
  2.060
  2.630
  3.130
  3.580
  3.980
  4.330
  4.650
  4.940
  5.200
  5.440
  5.660
  5.860
  6.040
  6.220
  6.370
  6.520
  6.660
  6.780
  6.900
  7.010
  7.120
  7.220
  7.310
  7.390
  7.480
Adjusted equity ratio
  -1.192
  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
  -47
  -49
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -97
  -101
  -105
  -110
  -114
  -119
  -123
  -128
  -133
  -139
  -144
Depreciation, amort., depletion, $m
  3
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
Funds from operations, $m
  22
  -46
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -93
  -97
  -101
  -104
  -108
  -112
  -117
  -121
  -125
Change in working capital, $m
  28
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
Cash from operations, $m
  -6
  -47
  -43
  -44
  -46
  -48
  -50
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -98
  -102
  -106
  -110
  -114
  -118
  -123
  -127
Maintenance CAPEX, $m
  0
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
New CAPEX, $m
  -4
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from investing activities, $m
  -30
  -3
  -3
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -17
  -18
  -18
  -19
  -20
  -22
  -23
Free cash flow, $m
  -36
  -50
  -46
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
  -138
  -144
  -150
Issuance/(repayment) of debt, $m
  5
  -61
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  12
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
Issuance/(repurchase) of shares, $m
  30
  117
  45
  48
  50
  52
  55
  57
  60
  63
  65
  68
  71
  74
  77
  81
  84
  88
  91
  95
  99
  103
  107
  111
  116
  120
  125
  130
  135
  141
  146
Cash from financing (excl. dividends), $m  
  35
  56
  51
  55
  57
  59
  62
  65
  68
  71
  74
  77
  80
  84
  87
  92
  95
  100
  103
  107
  112
  117
  121
  126
  131
  136
  142
  148
  153
  160
  166
Total cash flow (excl. dividends), $m
  -1
  5
  5
  5
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
Retained Cash Flow (-), $m
  8
  -117
  -45
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -107
  -111
  -116
  -120
  -125
  -130
  -135
  -141
  -146
Prev. year cash balance distribution, $m
 
  74
  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
 
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -55
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -107
  -111
  -115
  -120
  -125
  -129
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
 
  -36
  -37
  -37
  -36
  -36
  -35
  -34
  -33
  -32
  -30
  -29
  -27
  -25
  -23
  -21
  -19
  -17
  -15
  -13
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  100
  50.0
  28.1
  16.3
  9.6
  5.8
  3.6
  2.3
  1.4
  0.9
  0.6
  0.4
  0.3
  0.2
  0.1
  0.1
  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

NanoString Technologies, Inc. develops, manufactures and sells intuitive products that unlock scientifically valuable and clinically actionable biologic information from minute amounts of tissue. The Company is engaged in the development, manufacture and commercialization of instruments, consumables and services for profiling the activity of hundreds of genes and proteins simultaneously from a single tissue sample. The Company's nCounter Analysis System is an automated, multi-application, digital detection and counting system, which directly profiles hundreds of molecules simultaneously using a barcoding technology. The Company markets systems and related consumables to researchers in academic, government and biopharmaceutical laboratories for use in understanding fundamental biology and the molecular basis of diseases, such as cancer, and to clinical laboratories and medical centers for diagnostic use.

FINANCIAL RATIOS  of  NanoString Technologies (NSTG)

Valuation Ratios
P/E Ratio -3.2
Price to Sales 1.8
Price to Book 12.6
Price to Tangible Book
Price to Cash Flow -25.1
Price to Free Cash Flow -15.1
Growth Rates
Sales Growth Rate 36.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 32%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 391.7%
Total Debt to Equity 391.7%
Interest Coverage -11
Management Effectiveness
Return On Assets -39.3%
Ret/ On Assets - 3 Yr. Avg. -46.6%
Return On Total Capital -78.3%
Ret/ On T. Cap. - 3 Yr. Avg. -75.5%
Return On Equity -293.8%
Return On Equity - 3 Yr. Avg. -189%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 65.1%
Gross Margin - 3 Yr. Avg. 59.3%
EBITDA Margin -46.5%
EBITDA Margin - 3 Yr. Avg. -67.9%
Operating Margin -48.8%
Oper. Margin - 3 Yr. Avg. -69.9%
Pre-Tax Margin -54.7%
Pre-Tax Margin - 3 Yr. Avg. -76.7%
Net Profit Margin -54.7%
Net Profit Margin - 3 Yr. Avg. -77.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -0.7%
Payout Ratio 0%

NSTG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NSTG stock intrinsic value calculation we used $86 million for the last fiscal year's total revenue generated by NanoString Technologies. The default revenue input number comes from 2016 income statement of NanoString Technologies. 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 NSTG stock valuation model: a) initial revenue growth rate of 12.5% 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 NSTG is calculated based on our internal credit rating of NanoString Technologies, 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 NanoString Technologies.
    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 NSTG stock the variable cost ratio is equal to 104.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $39 million in the base year in the intrinsic value calculation for NSTG 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 9.1% for NanoString Technologies.

Corporate tax rate of 27% is the nominal tax rate for NanoString Technologies. 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 NSTG 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 NSTG are equal to 12.8%.

Life of production assets of 3.7 years is the average useful life of capital assets used in NanoString Technologies 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 NSTG is equal to 4.7%. 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 - $12 million for NanoString Technologies - 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 25.96 million for NanoString Technologies 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 NanoString Technologies at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ NanoString reports 3Q loss   [Nov-02-17 05:32PM  Associated Press]
▶ Is NanoString Technologies Inc (NSTG) Undervalued?   [Oct-31-17 04:45PM  Simply Wall St.]
▶ NanoString reports 2Q loss   [Aug-08-17 10:37PM  Associated Press]
▶ NanoString Technologies Announces Offering of Common Stock   [May-31-17 04:09PM  GlobeNewswire]
▶ NanoString reports 1Q loss   [May-04-17 06:28PM  Associated Press]
▶ NanoString reports 4Q loss   [04:39PM  Associated Press]
▶ Do Hedge Funds Love First Bancorp (FBNC)?   [Dec-15-16 02:09PM  at Insider Monkey]
▶ Is Whitestone REIT (WSR) A Good Stock To Buy?   [09:43AM  at Insider Monkey]
Financial statements of NSTG
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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