Intrinsic value of NanoString Technologies - NSTG

Previous Close

$12.21

  Intrinsic Value

$0.42

stock screener

  Rating & Target

str. sell

-97%

Previous close

$12.21

 
Intrinsic value

$0.42

 
Up/down potential

-97%

 
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
  32.90
  30.11
  27.60
  25.34
  23.31
  21.47
  19.83
  18.34
  17.01
  15.81
  14.73
  13.76
  12.88
  12.09
  11.38
  10.74
  10.17
  9.65
  9.19
  8.77
  8.39
  8.05
  7.75
  7.47
  7.23
  7.00
  6.80
  6.62
  6.46
  6.31
Revenue, $m
  86
  153
  199
  254
  318
  392
  476
  571
  676
  790
  915
  1,050
  1,195
  1,349
  1,512
  1,684
  1,865
  2,054
  2,252
  2,459
  2,675
  2,900
  3,133
  3,376
  3,628
  3,890
  4,163
  4,446
  4,740
  5,046
  5,365
Variable operating expenses, $m
 
  137
  178
  227
  285
  351
  427
  511
  605
  708
  820
  941
  1,070
  1,208
  1,354
  1,509
  1,671
  1,841
  2,018
  2,204
  2,397
  2,598
  2,807
  3,025
  3,251
  3,486
  3,730
  3,983
  4,247
  4,522
  4,807
Fixed operating expenses, $m
 
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
  80
  82
  84
  86
  88
  90
  92
  94
  96
  98
  100
Total operating expenses, $m
  128
  190
  232
  283
  342
  409
  486
  572
  667
  771
  885
  1,007
  1,138
  1,277
  1,425
  1,581
  1,745
  1,916
  2,095
  2,283
  2,477
  2,680
  2,891
  3,111
  3,339
  3,576
  3,822
  4,077
  4,343
  4,620
  4,907
Operating income, $m
  -41
  -37
  -34
  -29
  -24
  -17
  -10
  -1
  8
  19
  31
  43
  57
  71
  87
  103
  120
  138
  157
  177
  198
  219
  242
  265
  290
  315
  341
  369
  397
  427
  458
EBITDA, $m
  -38
  -36
  -31
  -26
  -20
  -13
  -4
  5
  16
  28
  41
  55
  70
  87
  104
  122
  142
  162
  183
  205
  228
  252
  278
  304
  331
  359
  389
  419
  451
  485
  519
Interest expense (income), $m
  4
  6
  8
  13
  18
  24
  31
  39
  48
  58
  69
  81
  94
  108
  122
  138
  154
  171
  189
  208
  228
  249
  270
  292
  315
  339
  364
  390
  417
  445
  474
Earnings before tax, $m
  -47
  -44
  -42
  -42
  -42
  -41
  -41
  -40
  -40
  -39
  -39
  -38
  -37
  -36
  -36
  -35
  -34
  -33
  -32
  -31
  -30
  -29
  -28
  -27
  -26
  -24
  -23
  -21
  -20
  -18
  -16
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
  -44
  -42
  -42
  -42
  -41
  -41
  -40
  -40
  -39
  -39
  -38
  -37
  -36
  -36
  -35
  -34
  -33
  -32
  -31
  -30
  -29
  -28
  -27
  -26
  -24
  -23
  -21
  -20
  -18
  -16

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
  126
  164
  210
  263
  324
  394
  472
  558
  653
  757
  868
  987
  1,114
  1,249
  1,391
  1,541
  1,698
  1,862
  2,033
  2,211
  2,396
  2,589
  2,790
  2,998
  3,215
  3,440
  3,674
  3,918
  4,171
  4,434
Adjusted assets (=assets-cash), $m
  52
  126
  164
  210
  263
  324
  394
  472
  558
  653
  757
  868
  987
  1,114
  1,249
  1,391
  1,541
  1,698
  1,862
  2,033
  2,211
  2,396
  2,589
  2,790
  2,998
  3,215
  3,440
  3,674
  3,918
  4,171
  4,434
Revenue / Adjusted assets
  1.654
  1.214
  1.213
  1.210
  1.209
  1.210
  1.208
  1.210
  1.211
  1.210
  1.209
  1.210
  1.211
  1.211
  1.211
  1.211
  1.210
  1.210
  1.209
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
Average production assets, $m
  11
  17
  23
  29
  36
  45
  54
  65
  77
  90
  104
  120
  136
  154
  172
  192
  213
  234
  257
  280
  305
  331
  357
  385
  414
  443
  475
  507
  540
  575
  612
Working capital, $m
  78
  21
  28
  35
  44
  55
  66
  79
  94
  110
  127
  146
  166
  187
  210
  234
  259
  286
  313
  342
  372
  403
  435
  469
  504
  541
  579
  618
  659
  701
  746
Total debt, $m
  47
  66
  100
  141
  189
  244
  306
  377
  455
  540
  633
  733
  841
  955
  1,076
  1,204
  1,339
  1,480
  1,628
  1,781
  1,942
  2,109
  2,283
  2,463
  2,651
  2,846
  3,048
  3,259
  3,478
  3,706
  3,943
Total liabilities, $m
  114
  114
  148
  189
  237
  292
  354
  425
  502
  588
  681
  781
  889
  1,003
  1,124
  1,252
  1,387
  1,528
  1,675
  1,829
  1,990
  2,157
  2,330
  2,511
  2,699
  2,894
  3,096
  3,307
  3,526
  3,754
  3,991
Total equity, $m
  12
  13
  16
  21
  26
  32
  39
  47
  56
  65
  76
  87
  99
  111
  125
  139
  154
  170
  186
  203
  221
  240
  259
  279
  300
  322
  344
  367
  392
  417
  443
Total liabilities and equity, $m
  126
  127
  164
  210
  263
  324
  393
  472
  558
  653
  757
  868
  988
  1,114
  1,249
  1,391
  1,541
  1,698
  1,861
  2,032
  2,211
  2,397
  2,589
  2,790
  2,999
  3,216
  3,440
  3,674
  3,918
  4,171
  4,434
Debt-to-equity ratio
  3.917
  5.210
  6.090
  6.720
  7.180
  7.520
  7.790
  7.990
  8.140
  8.270
  8.370
  8.450
  8.520
  8.570
  8.620
  8.660
  8.690
  8.720
  8.740
  8.760
  8.780
  8.800
  8.820
  8.830
  8.840
  8.850
  8.860
  8.870
  8.880
  8.890
  8.890
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
  -44
  -42
  -42
  -42
  -41
  -41
  -40
  -40
  -39
  -39
  -38
  -37
  -36
  -36
  -35
  -34
  -33
  -32
  -31
  -30
  -29
  -28
  -27
  -26
  -24
  -23
  -21
  -20
  -18
  -16
Depreciation, amort., depletion, $m
  3
  2
  2
  3
  4
  4
  5
  7
  8
  9
  10
  12
  14
  15
  17
  19
  21
  23
  26
  28
  30
  33
  36
  38
  41
  44
  47
  51
  54
  58
  61
Funds from operations, $m
  22
  -42
  -40
  -39
  -38
  -37
  -35
  -34
  -32
  -30
  -28
  -26
  -24
  -21
  -18
  -16
  -13
  -10
  -6
  -3
  0
  4
  8
  12
  16
  20
  25
  29
  34
  39
  45
Change in working capital, $m
  28
  5
  6
  8
  9
  10
  12
  13
  15
  16
  17
  19
  20
  21
  23
  24
  25
  26
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  44
Cash from operations, $m
  -6
  -47
  -46
  -47
  -47
  -47
  -47
  -47
  -47
  -46
  -46
  -45
  -44
  -42
  -41
  -39
  -38
  -36
  -34
  -32
  -30
  -27
  -25
  -22
  -19
  -16
  -13
  -10
  -7
  -3
  1
Maintenance CAPEX, $m
  0
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -7
  -8
  -9
  -10
  -12
  -14
  -15
  -17
  -19
  -21
  -23
  -26
  -28
  -30
  -33
  -36
  -38
  -41
  -44
  -47
  -51
  -54
  -58
New CAPEX, $m
  -4
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
Cash from investing activities, $m
  -30
  -5
  -7
  -8
  -10
  -12
  -14
  -16
  -19
  -21
  -23
  -25
  -28
  -32
  -34
  -37
  -40
  -43
  -46
  -50
  -53
  -56
  -60
  -64
  -67
  -71
  -75
  -79
  -85
  -89
  -94
Free cash flow, $m
  -36
  -53
  -53
  -55
  -57
  -59
  -61
  -63
  -65
  -67
  -69
  -70
  -72
  -74
  -75
  -76
  -78
  -79
  -80
  -81
  -82
  -83
  -84
  -86
  -87
  -88
  -89
  -90
  -91
  -92
  -93
Issuance/(repayment) of debt, $m
  5
  17
  34
  41
  48
  55
  63
  70
  78
  85
  93
  100
  107
  114
  121
  128
  135
  141
  147
  154
  160
  167
  174
  181
  188
  195
  203
  211
  219
  228
  237
Issuance/(repurchase) of shares, $m
  30
  58
  46
  46
  47
  47
  48
  48
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  49
  48
  48
  48
  47
  47
  46
  46
  45
  45
  44
  43
  43
Cash from financing (excl. dividends), $m  
  35
  75
  80
  87
  95
  102
  111
  118
  127
  134
  142
  149
  156
  163
  170
  177
  184
  190
  196
  202
  208
  215
  221
  228
  234
  241
  248
  256
  263
  271
  280
Total cash flow (excl. dividends), $m
  -1
  22
  27
  32
  38
  43
  49
  55
  61
  67
  73
  79
  84
  90
  95
  101
  106
  111
  116
  121
  126
  131
  137
  142
  148
  153
  159
  166
  172
  179
  186
Retained Cash Flow (-), $m
  8
  -58
  -46
  -46
  -47
  -47
  -48
  -48
  -49
  -49
  -49
  -49
  -49
  -49
  -49
  -49
  -49
  -49
  -49
  -48
  -48
  -48
  -47
  -47
  -46
  -46
  -45
  -45
  -44
  -43
  -43
Prev. year cash balance distribution, $m
 
  42
  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
 
  11
  15
  20
  25
  31
  39
  47
  57
  67
  78
  91
  104
  118
  134
  150
  167
  185
  203
  223
  243
  265
  287
  310
  334
  359
  385
  412
  440
  469
  500
Cash available for distribution, $m
 
  6
  -19
  -14
  -9
  -4
  1
  7
  13
  18
  24
  30
  35
  41
  46
  52
  57
  62
  67
  73
  78
  84
  89
  95
  101
  107
  114
  121
  128
  136
  144
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
 
  6
  -17
  -13
  -8
  -3
  1
  5
  8
  11
  13
  14
  15
  16
  16
  15
  14
  14
  12
  11
  10
  9
  7
  6
  5
  4
  3
  3
  2
  1
  1
Current shareholders' claim on cash, %
  100
  50.0
  33.4
  24.1
  18.5
  14.8
  12.3
  10.6
  9.3
  8.3
  7.5
  6.9
  6.4
  6.0
  5.7
  5.4
  5.1
  4.9
  4.7
  4.6
  4.4
  4.3
  4.2
  4.1
  4.0
  3.9
  3.8
  3.8
  3.7
  3.7
  3.6

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 -5.6
Price to Sales 3.1
Price to Book 21.9
Price to Tangible Book
Price to Cash Flow -43.8
Price to Free Cash Flow -26.3
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 $115 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 32.9% 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 89.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $52 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 12.8% 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 9.9%.

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 NSTG are equal to 11.4%.

Life of production assets of 10 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 13.9%. 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 - $40 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 24 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 $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating
TMO Thermo Fisher 216.85 95.38  str.sell
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COMPANY NEWS

▶ 5 Top Performing Stocks of the Best ETF of May   [May-31-18 11:10AM  Zacks]
▶ NanoString: 1Q Earnings Snapshot   [May-08-18 04:57PM  Associated Press]
▶ NanoString reports 4Q loss   [Mar-07-18 04:15PM  Associated Press]
▶ 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]
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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