Intrinsic value of Xencor - XNCR

Previous Close

$42.33

  Intrinsic Value

$3.98

stock screener

  Rating & Target

str. sell

-91%

Previous close

$42.33

 
Intrinsic value

$3.98

 
Up/down potential

-91%

 
Rating

str. sell

We calculate the intrinsic value of XNCR 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, %
  214.29
  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
  88
  37
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  113
  118
Variable operating expenses, $m
 
  28
  28
  29
  30
  31
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
  86
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
  65
  28
  28
  29
  30
  31
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
  86
Operating income, $m
  23
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
EBITDA, $m
  24
  12
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
Earnings before tax, $m
  25
  9
  9
  9
  9
  9
  10
  10
  10
  10
  10
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  16
  16
  16
  17
  17
  18
  19
  19
  20
Tax expense, $m
  1
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
Net income, $m
  24
  7
  7
  7
  7
  7
  7
  7
  7
  7
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  130
  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
  429
  274
  280
  288
  296
  305
  314
  325
  337
  349
  363
  377
  392
  409
  426
  444
  464
  484
  506
  529
  553
  579
  606
  635
  665
  696
  730
  765
  802
  840
  881
Adjusted assets (=assets-cash), $m
  299
  274
  280
  288
  296
  305
  314
  325
  337
  349
  363
  377
  392
  409
  426
  444
  464
  484
  506
  529
  553
  579
  606
  635
  665
  696
  730
  765
  802
  840
  881
Revenue / Adjusted assets
  0.294
  0.135
  0.136
  0.135
  0.135
  0.134
  0.134
  0.135
  0.134
  0.135
  0.135
  0.135
  0.135
  0.134
  0.134
  0.135
  0.134
  0.134
  0.134
  0.134
  0.134
  0.135
  0.134
  0.134
  0.134
  0.134
  0.134
  0.133
  0.133
  0.135
  0.134
Average production assets, $m
  13
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  38
  40
  41
  43
  45
  48
  50
  52
Working capital, $m
  36
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Total debt, $m
  0
  3
  5
  8
  11
  15
  19
  23
  28
  33
  38
  44
  50
  57
  64
  71
  79
  88
  96
  106
  115
  126
  137
  148
  160
  173
  187
  201
  216
  231
  248
Total liabilities, $m
  115
  111
  113
  116
  119
  123
  127
  131
  136
  141
  146
  152
  158
  165
  172
  179
  187
  196
  204
  214
  224
  234
  245
  256
  269
  281
  295
  309
  324
  340
  356
Total equity, $m
  314
  163
  167
  171
  176
  182
  187
  194
  201
  208
  216
  225
  234
  243
  254
  265
  276
  289
  302
  315
  330
  345
  361
  378
  396
  415
  435
  456
  478
  501
  525
Total liabilities and equity, $m
  429
  274
  280
  287
  295
  305
  314
  325
  337
  349
  362
  377
  392
  408
  426
  444
  463
  485
  506
  529
  554
  579
  606
  634
  665
  696
  730
  765
  802
  841
  881
Debt-to-equity ratio
  0.000
  0.020
  0.030
  0.050
  0.060
  0.080
  0.100
  0.120
  0.140
  0.160
  0.180
  0.200
  0.220
  0.230
  0.250
  0.270
  0.290
  0.300
  0.320
  0.340
  0.350
  0.360
  0.380
  0.390
  0.400
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
Adjusted equity ratio
  0.615
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  24
  7
  7
  7
  7
  7
  7
  7
  7
  7
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
Depreciation, amort., depletion, $m
  1
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
Funds from operations, $m
  155
  9
  9
  10
  10
  10
  10
  10
  10
  11
  11
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  14
  15
  15
  16
  17
  17
  18
  18
  19
  20
Change in working capital, $m
  60
  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
  95
  9
  10
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
Maintenance CAPEX, $m
  0
  -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
  -5
  -5
New CAPEX, $m
  -3
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  -214
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
Free cash flow, $m
  -119
  7
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  13
  13
  13
Issuance/(repayment) of debt, $m
  0
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
  16
Issuance/(repurchase) of shares, $m
  128
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
Cash from financing (excl. dividends), $m  
  121
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  8
  8
  9
  10
  10
  12
  12
  14
  14
  16
  17
  18
  19
  20
  22
  23
  25
  26
Total cash flow (excl. dividends), $m
  2
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
Retained Cash Flow (-), $m
  -152
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
Prev. year cash balance distribution, $m
 
  123
  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
 
  9
  9
  9
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
  27
  28
Cash available for distribution, $m
 
  129
  6
  6
  6
  6
  6
  6
  6
  6
  6
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
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
 
  123
  6
  5
  5
  5
  4
  4
  4
  3
  3
  3
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
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
  99.9
  99.8
  99.8
  99.7
  99.5
  99.4
  99.2
  99.1
  98.9
  98.7
  98.5
  98.3
  98.0
  97.8
  97.6
  97.3
  97.0
  96.8

Xencor, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on discovering and developing engineered monoclonal antibodies to treat severe and life threatening diseases. It has developed two clinical-stage product candidates, using its Immune Inhibitor Fc platform: XmAb5871, which is in two Phase II trials and is being developed for autoimmune disease, and XmAb7195, which is in a Phase I trial and is being developed for asthma and allergic diseases. It is also developing a pipeline of bispecific antibody candidates using its heterodimer Fc bispecific technology: XmAb14045, which is in a Phase I trial for the treatment of acute myeloid leukemia (AML); XmAb13676, which is in a Phase I trial for the treatment of B-cell malignancies; XmAb18087, which is in preclinical development for the treatment of neuroendocrine tumors, and XmAb20717, which is in preclinical development for the treatment of various cancers and is its dual checkpoint inhibitor.

FINANCIAL RATIOS  of  Xencor (XNCR)

Valuation Ratios
P/E Ratio 82.1
Price to Sales 22.4
Price to Book 6.3
Price to Tangible Book
Price to Cash Flow 20.8
Price to Free Cash Flow 21.4
Growth Rates
Sales Growth Rate 214.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
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 7.5%
Ret/ On Assets - 3 Yr. Avg. -8.7%
Return On Total Capital 10.1%
Ret/ On T. Cap. - 3 Yr. Avg. -10.1%
Return On Equity 10.1%
Return On Equity - 3 Yr. Avg. -10.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 29.5%
EBITDA Margin - 3 Yr. Avg. -60.4%
Operating Margin 26.1%
Oper. Margin - 3 Yr. Avg. -66%
Pre-Tax Margin 28.4%
Pre-Tax Margin - 3 Yr. Avg. -65.3%
Net Profit Margin 27.3%
Net Profit Margin - 3 Yr. Avg. -65.7%
Effective Tax Rate 4%
Eff/ Tax Rate - 3 Yr. Avg. 1.3%
Payout Ratio 0%

XNCR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XNCR stock intrinsic value calculation we used $36 million for the last fiscal year's total revenue generated by Xencor. The default revenue input number comes from 2016 income statement of Xencor. 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 XNCR 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 XNCR is calculated based on our internal credit rating of Xencor, 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 Xencor.
    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 XNCR stock the variable cost ratio is equal to 75.6%.

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 XNCR 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 5.4% for Xencor.

Corporate tax rate of 27% is the nominal tax rate for Xencor. 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 XNCR stock is equal to 25%.

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 XNCR are equal to 44.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Xencor 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 XNCR is equal to -19.2%. 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 - $282 million for Xencor - 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 47 million for Xencor 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 Xencor at the current share price and the inputted number of shares is $2.0 billion.

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COMPANY NEWS

▶ 3 Top Biotech Stocks to Buy Right Now   [Jun-18-18 11:45AM  Motley Fool]
▶ Xencor to Present at Upcoming Investor Conferences   [May-31-18 04:01PM  PR Newswire]
▶ Xencor: 1Q Earnings Snapshot   [May-07-18 04:19PM  Associated Press]
▶ Xencor, Inc. to Host Earnings Call   [12:30PM  ACCESSWIRE]
▶ Harry Boxers five biotech stocks to watch   [01:46PM  MarketWatch]
▶ 3 Top Biotech Stocks to Buy in April   [Apr-04-18 09:15PM  Motley Fool]
▶ Xencor reports 4Q loss   [Feb-27-18 06:27PM  Associated Press]
▶ Xencor, Inc. to Host Earnings Call   [12:40PM  ACCESSWIRE]
▶ Xencor to Present at Upcoming Investor Conferences   [Feb-07-18 08:00AM  PR Newswire]
▶ Xencor Announces 2018 Priorities and Expected Milestones   [Jan-05-18 08:00AM  PR Newswire]
▶ ETFs with exposure to Xencor, Inc. : December 28, 2017   [Dec-28-17 12:46PM  Capital Cube]
▶ Xencor Appoints Richard Ranieri to Board of Directors   [Dec-19-17 08:00AM  PR Newswire]
▶ Xencor Receives Milestone Payment from Amgen   [Dec-05-17 08:00AM  PR Newswire]
▶ Xencor reports 3Q loss   [Nov-07-17 05:14PM  Associated Press]
▶ Xencor, Inc. to Host Earnings Call   [12:00PM  ACCESSWIRE]
▶ Xencor to Present at Upcoming Investor Conferences   [Nov-01-17 08:00AM  PR Newswire]
▶ Xencor to Present at Upcoming Investor Conferences   [Sep-20-17 08:00AM  PR Newswire]
▶ ETFs with exposure to Xencor, Inc. : September 19, 2017   [Sep-19-17 06:52PM  Capital Cube]
▶ Xencor reports 2Q loss   [Aug-07-17 10:55PM  Associated Press]
▶ Xencor to Present at Upcoming Investor Conferences   [Aug-02-17 08:00AM  PR Newswire]
▶ ETFs with exposure to Xencor, Inc. : June 12, 2017   [Jun-12-17 02:36PM  Capital Cube]
▶ Worst-Performing Gurus' Stocks   [May-23-17 05:00PM  GuruFocus.com]
▶ Xencor reports 1Q loss   [May-09-17 05:24PM  Associated Press]
Financial statements of XNCR
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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