Intrinsic value of Ophthotech - OPHT

Previous Close

$3.35

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$3.35

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of OPHT 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 0.1

 

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, %
  -1.92
  2.00
  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
Revenue, $m
  51
  52
  53
  55
  56
  58
  60
  62
  64
  66
  69
  72
  74
  78
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  139
  145
  152
  160
  167
Variable operating expenses, $m
 
  175
  179
  184
  189
  195
  201
  208
  216
  224
  232
  241
  251
  262
  273
  284
  297
  310
  324
  339
  354
  371
  388
  406
  426
  446
  467
  490
  513
  538
  564
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
  246
  175
  179
  184
  189
  195
  201
  208
  216
  224
  232
  241
  251
  262
  273
  284
  297
  310
  324
  339
  354
  371
  388
  406
  426
  446
  467
  490
  513
  538
  564
Operating income, $m
  -196
  -123
  -126
  -130
  -133
  -137
  -142
  -146
  -152
  -157
  -163
  -170
  -177
  -184
  -192
  -200
  -209
  -218
  -228
  -238
  -249
  -261
  -273
  -286
  -299
  -314
  -329
  -344
  -361
  -379
  -397
EBITDA, $m
  -195
  -123
  -126
  -129
  -133
  -137
  -141
  -146
  -151
  -157
  -163
  -169
  -176
  -183
  -191
  -199
  -208
  -217
  -227
  -237
  -248
  -260
  -272
  -284
  -298
  -312
  -327
  -343
  -359
  -377
  -395
Interest expense (income), $m
  0
  0
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
  -13
Earnings before tax, $m
  -194
  -123
  -113
  -116
  -120
  -124
  -128
  -133
  -138
  -144
  -150
  -156
  -163
  -171
  -179
  -187
  -196
  -205
  -215
  -225
  -236
  -248
  -260
  -273
  -286
  -301
  -316
  -332
  -348
  -366
  -384
Tax expense, $m
  -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
  0
  0
Net income, $m
  -193
  -123
  -113
  -116
  -120
  -124
  -128
  -133
  -138
  -144
  -150
  -156
  -163
  -171
  -179
  -187
  -196
  -205
  -215
  -225
  -236
  -248
  -260
  -273
  -286
  -301
  -316
  -332
  -348
  -366
  -384

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  289
  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
  300
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
Adjusted assets (=assets-cash), $m
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
Revenue / Adjusted assets
  4.636
  4.727
  4.818
  4.583
  4.667
  4.833
  4.615
  4.769
  4.571
  4.714
  4.600
  4.800
  4.625
  4.588
  4.765
  4.667
  4.632
  4.600
  4.571
  4.545
  4.565
  4.583
  4.600
  4.615
  4.667
  4.552
  4.633
  4.677
  4.606
  4.706
  4.639
Average production assets, $m
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
Working capital, $m
  230
  -60
  -62
  -63
  -65
  -67
  -69
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -94
  -98
  -102
  -106
  -111
  -116
  -122
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
  -185
  -194
Total debt, $m
  0
  -385
  -385
  -384
  -384
  -384
  -383
  -383
  -383
  -382
  -382
  -381
  -381
  -380
  -379
  -379
  -378
  -377
  -376
  -376
  -375
  -374
  -373
  -372
  -371
  -369
  -368
  -367
  -365
  -364
  -363
Total liabilities, $m
  394
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  32
Total equity, $m
  -95
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
Total liabilities and equity, $m
  299
  11
  11
  12
  12
  12
  13
  13
  13
  14
  14
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  26
  27
  29
  30
  31
  33
  34
  36
Debt-to-equity ratio
  0.000
  -343.020
  -335.110
  -326.490
  -317.310
  -307.710
  -297.800
  -287.700
  -277.480
  -267.240
  -257.030
  -246.910
  -236.930
  -227.120
  -217.520
  -208.160
  -199.040
  -190.190
  -181.610
  -173.320
  -165.310
  -157.590
  -150.150
  -143.000
  -136.130
  -129.530
  -123.210
  -117.150
  -111.340
  -105.780
  -100.460
Adjusted equity ratio
  -34.909
  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
  -193
  -123
  -113
  -116
  -120
  -124
  -128
  -133
  -138
  -144
  -150
  -156
  -163
  -171
  -179
  -187
  -196
  -205
  -215
  -225
  -236
  -248
  -260
  -273
  -286
  -301
  -316
  -332
  -348
  -366
  -384
Depreciation, amort., depletion, $m
  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
  2
  2
Funds from operations, $m
  -77
  -123
  -112
  -115
  -119
  -123
  -128
  -132
  -138
  -143
  -149
  -156
  -162
  -170
  -178
  -186
  -195
  -204
  -214
  -224
  -235
  -246
  -259
  -271
  -285
  -299
  -314
  -330
  -346
  -364
  -382
Change in working capital, $m
  32
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
Cash from operations, $m
  -109
  -122
  -111
  -114
  -117
  -121
  -125
  -130
  -135
  -140
  -146
  -152
  -159
  -166
  -174
  -182
  -190
  -199
  -209
  -219
  -230
  -241
  -253
  -265
  -278
  -292
  -307
  -322
  -338
  -355
  -373
Maintenance CAPEX, $m
  0
  -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
  -2
New CAPEX, $m
  -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
  0
  0
Cash from investing activities, $m
  14
  -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
  -2
Free cash flow, $m
  -95
  -122
  -111
  -115
  -118
  -122
  -126
  -131
  -136
  -141
  -147
  -153
  -160
  -167
  -175
  -183
  -192
  -201
  -210
  -220
  -231
  -242
  -254
  -267
  -280
  -294
  -309
  -324
  -340
  -358
  -376
Issuance/(repayment) of debt, $m
  0
  -385
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
Issuance/(repurchase) of shares, $m
  7
  509
  113
  116
  120
  124
  128
  133
  138
  144
  150
  157
  163
  171
  179
  187
  196
  205
  215
  225
  236
  248
  260
  273
  287
  301
  316
  332
  348
  366
  384
Cash from financing (excl. dividends), $m  
  7
  124
  113
  116
  120
  124
  128
  133
  138
  144
  150
  158
  164
  172
  180
  188
  197
  206
  216
  226
  237
  249
  261
  274
  288
  302
  317
  333
  349
  367
  386
Total cash flow (excl. dividends), $m
  -88
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
Retained Cash Flow (-), $m
  155
  -509
  -113
  -116
  -120
  -124
  -128
  -133
  -138
  -144
  -150
  -157
  -163
  -171
  -179
  -187
  -196
  -205
  -215
  -225
  -236
  -248
  -260
  -273
  -287
  -301
  -316
  -332
  -348
  -366
  -384
Prev. year cash balance distribution, $m
 
  289
  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
 
  -218
  -111
  -114
  -118
  -122
  -126
  -130
  -135
  -141
  -147
  -153
  -160
  -167
  -174
  -182
  -191
  -200
  -209
  -219
  -230
  -241
  -253
  -266
  -279
  -293
  -308
  -323
  -339
  -356
  -374
Discount rate, %
 
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
 
  -206
  -99
  -95
  -90
  -86
  -81
  -77
  -72
  -66
  -61
  -56
  -50
  -45
  -40
  -35
  -30
  -25
  -21
  -18
  -14
  -11
  -9
  -7
  -5
  -4
  -3
  -2
  -1
  -1
  -1
Current shareholders' claim on cash, %
  100
  50.0
  0.5
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Ophthotech Corporation is a biopharmaceutical company. The Company is engaged in the development of therapeutics to treat ophthalmic diseases, with a focus on diseases of the back of the eye. Its primary focus is developing therapeutics for age-related macular degeneration (AMD), which is a disorder of the central portion of the retina, known as the macula, that may result in blindness. Its product candidates include Fovista and Zimura. Fovista is designed to target platelet derived growth factor (PDGF) in combination with anti-vascular endothelial growth factor (VEGF) drugs to disrupt the formation of abnormal new blood vessels in wet AMD. Zimura targets complement factor C5, a central component of the complement cascade. The Company has initiated a Phase II/III clinical trial investigating Zimura for treatment of geographic atrophy.

FINANCIAL RATIOS  of  Ophthotech (OPHT)

Valuation Ratios
P/E Ratio -0.6
Price to Sales 2.3
Price to Book -1.3
Price to Tangible Book
Price to Cash Flow -1.1
Price to Free Cash Flow -1.1
Growth Rates
Sales Growth Rate -1.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.7%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -52.9%
Ret/ On Assets - 3 Yr. Avg. -36.6%
Return On Total Capital 1102.9%
Ret/ On T. Cap. - 3 Yr. Avg. 304.1%
Return On Equity 1102.9%
Return On Equity - 3 Yr. Avg. 304.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -378.4%
EBITDA Margin - 3 Yr. Avg. -269.4%
Operating Margin -382.4%
Oper. Margin - 3 Yr. Avg. -272.2%
Pre-Tax Margin -380.4%
Pre-Tax Margin - 3 Yr. Avg. -270.7%
Net Profit Margin -378.4%
Net Profit Margin - 3 Yr. Avg. -289.2%
Effective Tax Rate 0.5%
Eff/ Tax Rate - 3 Yr. Avg. -10.6%
Payout Ratio 0%

OPHT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OPHT stock intrinsic value calculation we used $51 million for the last fiscal year's total revenue generated by Ophthotech. The default revenue input number comes from 2016 income statement of Ophthotech. 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 OPHT stock valuation model: a) initial revenue growth rate of 2% 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 5.9%, whose default value for OPHT is calculated based on our internal credit rating of Ophthotech, 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 Ophthotech.
    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 OPHT stock the variable cost ratio is equal to 337.3%.

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 OPHT 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 Ophthotech.

Corporate tax rate of 27% is the nominal tax rate for Ophthotech. 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 OPHT 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 OPHT are equal to 5.9%.

Life of production assets of 3 years is the average useful life of capital assets used in Ophthotech 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 OPHT is equal to -115.7%. 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 - $-95 million for Ophthotech - 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 35.942 million for Ophthotech 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 Ophthotech at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Ophthotech (OPHT) Jumps: Stock Rises 11.9%   [Nov-14-17 08:43AM  Zacks]
▶ Ophthotech posts 3Q profit   [07:22AM  Associated Press]
▶ Ophthotech Corp. to Host Earnings Call   [06:00AM  ACCESSWIRE]
▶ Ophthotech reports 2Q loss   [Jul-26-17 03:23PM  Associated Press]
▶ Ophthotech reports 1Q loss   [07:52AM  Associated Press]
▶ ETFs with exposure to Ophthotech Corp. : May 1, 2017   [May-01-17 04:15PM  Capital Cube]
▶ ETFs with exposure to Ophthotech Corp. : April 19, 2017   [Apr-19-17 02:29PM  Capital Cube]
▶ ETFs with exposure to Ophthotech Corp. : April 7, 2017   [Apr-07-17 05:14PM  Capital Cube]
▶ ETFs with exposure to Ophthotech Corp. : March 27, 2017   [Mar-27-17 04:02PM  Capital Cube]
▶ Ophthotech Hits 52-Week Low on 4Q Loss, Updates   [Mar-01-17 10:45AM  at Investopedia]
▶ [$$] Medical Megadeals Dominate Deal Flow   [Feb-27-17 08:38PM  at The Wall Street Journal]
▶ Ophthotech Hires Adviser, Mulls Strategic Options   [Feb-02-17 03:01PM  at Investopedia]
▶ Ophthotech Announces Strategic Review Plan   [06:30AM  Business Wire]
Financial statements of OPHT
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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