Intrinsic value of Progenics Pharmaceuticals - PGNX

Previous Close

$6.55

  Intrinsic Value

$0.34

stock screener

  Rating & Target

str. sell

-95%

  Value-price divergence*

-75%

Previous close

$6.55

 
Intrinsic value

$0.34

 
Up/down potential

-95%

 
Rating

str. sell

 
Value-price divergence*

-75%

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

We calculate the intrinsic value of PGNX 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 0.4

 

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, %
  666.67
  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
  69
  70
  72
  74
  76
  78
  81
  84
  86
  90
  93
  97
  101
  105
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  187
  196
  206
  216
  226
Variable operating expenses, $m
 
  75
  77
  79
  81
  84
  86
  89
  92
  96
  99
  102
  106
  111
  115
  120
  125
  131
  137
  143
  150
  157
  164
  172
  180
  188
  197
  207
  217
  227
  238
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
  56
  115
  118
  121
  124
  128
  131
  135
  140
  145
  149
  153
  158
  165
  170
  176
  183
  190
  198
  205
  214
  223
  231
  241
  251
  260
  271
  283
  295
  307
  320
Operating income, $m
  13
  -45
  -46
  -47
  -48
  -50
  -51
  -52
  -53
  -55
  -56
  -56
  -58
  -59
  -61
  -63
  -64
  -66
  -68
  -70
  -71
  -73
  -75
  -77
  -80
  -82
  -84
  -86
  -89
  -91
  -94
EBITDA, $m
  15
  -42
  -43
  -44
  -45
  -47
  -48
  -49
  -50
  -52
  -53
  -54
  -56
  -57
  -59
  -60
  -62
  -63
  -65
  -67
  -68
  -70
  -72
  -74
  -76
  -78
  -80
  -82
  -84
  -87
  -89
Interest expense (income), $m
  0
  2
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
Earnings before tax, $m
  13
  -47
  -46
  -48
  -49
  -50
  -51
  -53
  -54
  -56
  -57
  -57
  -59
  -61
  -62
  -64
  -66
  -68
  -70
  -72
  -74
  -76
  -78
  -80
  -83
  -85
  -87
  -90
  -93
  -95
  -98
Tax expense, $m
  2
  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
  11
  -47
  -46
  -48
  -49
  -50
  -51
  -53
  -54
  -56
  -57
  -57
  -59
  -61
  -62
  -64
  -66
  -68
  -70
  -72
  -74
  -76
  -78
  -80
  -83
  -85
  -87
  -90
  -93
  -95
  -98

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  139
  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
  199
  61
  63
  64
  66
  68
  70
  73
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  156
  163
  171
  179
  188
  197
Adjusted assets (=assets-cash), $m
  60
  61
  63
  64
  66
  68
  70
  73
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  156
  163
  171
  179
  188
  197
Revenue / Adjusted assets
  1.150
  1.148
  1.143
  1.156
  1.152
  1.147
  1.157
  1.151
  1.147
  1.154
  1.148
  1.155
  1.148
  1.154
  1.147
  1.152
  1.144
  1.148
  1.150
  1.153
  1.145
  1.155
  1.156
  1.148
  1.155
  1.147
  1.147
  1.146
  1.151
  1.149
  1.147
Average production assets, $m
  35
  36
  37
  37
  38
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  83
  87
  91
  95
  100
  104
  109
  115
Working capital, $m
  132
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Total debt, $m
  49
  10
  11
  13
  14
  16
  18
  20
  23
  25
  28
  31
  34
  37
  41
  44
  48
  52
  57
  61
  66
  71
  77
  83
  89
  95
  102
  109
  116
  124
  132
Total liabilities, $m
  94
  55
  56
  58
  59
  61
  63
  65
  68
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  122
  128
  134
  140
  147
  154
  161
  169
  177
Total equity, $m
  105
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Total liabilities and equity, $m
  199
  61
  62
  64
  66
  68
  70
  72
  76
  78
  81
  84
  88
  91
  96
  99
  103
  108
  113
  118
  123
  129
  136
  142
  149
  156
  163
  171
  179
  188
  197
Debt-to-equity ratio
  0.467
  1.650
  1.810
  1.990
  2.180
  2.380
  2.590
  2.800
  3.020
  3.230
  3.440
  3.650
  3.860
  4.070
  4.270
  4.460
  4.650
  4.840
  5.020
  5.190
  5.360
  5.520
  5.680
  5.830
  5.970
  6.110
  6.240
  6.370
  6.490
  6.600
  6.710
Adjusted equity ratio
  -0.567
  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
  11
  -47
  -46
  -48
  -49
  -50
  -51
  -53
  -54
  -56
  -57
  -57
  -59
  -61
  -62
  -64
  -66
  -68
  -70
  -72
  -74
  -76
  -78
  -80
  -83
  -85
  -87
  -90
  -93
  -95
  -98
Depreciation, amort., depletion, $m
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
Funds from operations, $m
  26
  -44
  -44
  -45
  -46
  -47
  -48
  -50
  -51
  -52
  -54
  -55
  -57
  -58
  -60
  -62
  -63
  -65
  -67
  -69
  -71
  -73
  -75
  -77
  -79
  -81
  -83
  -86
  -88
  -91
  -93
Change in working capital, $m
  7
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  19
  -44
  -43
  -45
  -46
  -47
  -48
  -49
  -51
  -52
  -53
  -55
  -56
  -58
  -59
  -61
  -63
  -64
  -66
  -68
  -70
  -72
  -74
  -76
  -78
  -80
  -83
  -85
  -87
  -90
  -92
Maintenance CAPEX, $m
  0
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
New CAPEX, $m
  -4
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Cash from investing activities, $m
  -4
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
Free cash flow, $m
  15
  -46
  -46
  -47
  -48
  -50
  -51
  -52
  -54
  -56
  -57
  -59
  -60
  -62
  -64
  -66
  -68
  -70
  -72
  -74
  -76
  -78
  -81
  -83
  -85
  -88
  -91
  -93
  -96
  -99
  -102
Issuance/(repayment) of debt, $m
  49
  -39
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
Issuance/(repurchase) of shares, $m
  1
  87
  47
  48
  49
  50
  52
  53
  54
  56
  57
  58
  59
  61
  63
  64
  66
  68
  70
  72
  74
  76
  79
  81
  83
  86
  88
  91
  93
  96
  99
Cash from financing (excl. dividends), $m  
  50
  48
  48
  49
  51
  52
  54
  55
  56
  59
  60
  61
  62
  64
  66
  68
  70
  72
  74
  77
  79
  81
  84
  87
  89
  92
  95
  98
  100
  104
  107
Total cash flow (excl. dividends), $m
  65
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
Retained Cash Flow (-), $m
  -15
  -87
  -47
  -48
  -49
  -50
  -52
  -53
  -54
  -56
  -57
  -58
  -59
  -61
  -63
  -64
  -66
  -68
  -70
  -72
  -74
  -76
  -79
  -81
  -83
  -86
  -88
  -91
  -93
  -96
  -99
Prev. year cash balance distribution, $m
 
  139
  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
 
  54
  -45
  -46
  -47
  -48
  -49
  -50
  -52
  -53
  -54
  -56
  -57
  -59
  -60
  -62
  -64
  -66
  -67
  -69
  -71
  -73
  -75
  -77
  -79
  -82
  -84
  -86
  -89
  -91
  -94
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
 
  52
  -41
  -40
  -38
  -37
  -36
  -34
  -32
  -30
  -29
  -27
  -24
  -22
  -20
  -18
  -16
  -14
  -12
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
Current shareholders' claim on cash, %
  100
  50.0
  17.8
  6.3
  2.3
  0.8
  0.3
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Progenics Pharmaceuticals, Inc. is engaged in developing medicines and other products for targeting and treating cancer. The Company's pipeline includes therapeutic agents designed to target cancer (AZEDRA and 1095); prostate specific membrane antigen (PSMA)-targeted imaging agents for prostate cancer (1404 and PyL), and imaging analysis tools. It also includes commercial product, RELISTOR (methylnaltrexone bromide) for opioid-induced constipation. AZEDRA is a radiotherapeutic product candidate in development as a treatment for malignant and/or recurrent pheochromocytoma and paraganglioma, rare tumors found in the adrenal glands and outside of the adrenal glands, respectively. RELISTOR is a treatment for opioid induced constipation. PyL is a clinical-stage, fluorinated PSMA-targeted Positron Emission Topography (PET) imaging agent for prostate cancer. PSMA TTC is a thorium-227 labeled PSMA-targeted antibody therapeutic.

FINANCIAL RATIOS  of  Progenics Pharmaceuticals (PGNX)

Valuation Ratios
P/E Ratio 41.8
Price to Sales 6.7
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 24.2
Price to Free Cash Flow 30.6
Growth Rates
Sales Growth Rate 666.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 46.7%
Total Debt to Equity 46.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. -5.7%
Return On Total Capital 9%
Ret/ On T. Cap. - 3 Yr. Avg. -7.8%
Return On Equity 11.3%
Return On Equity - 3 Yr. Avg. -7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 33.3%
EBITDA Margin 21.7%
EBITDA Margin - 3 Yr. Avg. -130.5%
Operating Margin 18.8%
Oper. Margin - 3 Yr. Avg. -135.9%
Pre-Tax Margin 18.8%
Pre-Tax Margin - 3 Yr. Avg. -135.9%
Net Profit Margin 15.9%
Net Profit Margin - 3 Yr. Avg. -136.1%
Effective Tax Rate 15.4%
Eff/ Tax Rate - 3 Yr. Avg. -6%
Payout Ratio 0%

PGNX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PGNX stock intrinsic value calculation we used $69 million for the last fiscal year's total revenue generated by Progenics Pharmaceuticals. The default revenue input number comes from 2016 income statement of Progenics Pharmaceuticals. 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 PGNX 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 4.3%, whose default value for PGNX is calculated based on our internal credit rating of Progenics Pharmaceuticals, 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 Progenics Pharmaceuticals.
    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 PGNX stock the variable cost ratio is equal to 107.2%.

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 PGNX 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 Progenics Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Progenics Pharmaceuticals. 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 PGNX 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 PGNX are equal to 50.7%.

Life of production assets of 24 years is the average useful life of capital assets used in Progenics Pharmaceuticals 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 PGNX is equal to -10.1%. 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 - $105 million for Progenics Pharmaceuticals - 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 67.503 million for Progenics Pharmaceuticals 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 Progenics Pharmaceuticals at the current share price and the inputted number of shares is $0.4 billion.

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Financial statements of PGNX
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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