Intrinsic value of ABIOMED, Inc. - ABMD

Previous Close

$333.25

  Intrinsic Value

$209.85

stock screener

  Rating & Target

sell

-37%

Previous close

$333.25

 
Intrinsic value

$209.85

 
Up/down potential

-37%

 
Rating

sell

We calculate the intrinsic value of ABMD 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 0001), $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 15.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  30.20
  27.68
  25.41
  23.37
  21.53
  19.88
  18.39
  17.05
  15.85
  14.76
  13.79
  12.91
  12.12
  11.41
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
Revenue, $m
  773
  987
  1,238
  1,528
  1,857
  2,226
  2,635
  3,085
  3,574
  4,101
  4,667
  5,269
  5,907
  6,581
  7,290
  8,032
  8,809
  9,620
  10,465
  11,344
  12,259
  13,210
  14,198
  15,225
  16,292
  17,402
  18,555
  19,755
  21,003
  22,303
Variable operating expenses, $m
  420
  532
  665
  817
  991
  1,185
  1,401
  1,638
  1,896
  2,174
  2,461
  2,778
  3,115
  3,470
  3,844
  4,236
  4,645
  5,073
  5,518
  5,982
  6,464
  6,966
  7,487
  8,028
  8,591
  9,176
  9,784
  10,417
  11,075
  11,760
Fixed operating expenses, $m
  115
  118
  121
  123
  126
  129
  132
  134
  137
  140
  144
  147
  150
  153
  157
  160
  164
  167
  171
  175
  178
  182
  186
  191
  195
  199
  203
  208
  212
  217
Total operating expenses, $m
  535
  650
  786
  940
  1,117
  1,314
  1,533
  1,772
  2,033
  2,314
  2,605
  2,925
  3,265
  3,623
  4,001
  4,396
  4,809
  5,240
  5,689
  6,157
  6,642
  7,148
  7,673
  8,219
  8,786
  9,375
  9,987
  10,625
  11,287
  11,977
Operating income, $m
  238
  337
  453
  587
  740
  912
  1,102
  1,312
  1,540
  1,786
  2,062
  2,344
  2,642
  2,958
  3,289
  3,637
  4,000
  4,380
  4,776
  5,188
  5,616
  6,062
  6,525
  7,006
  7,507
  8,027
  8,568
  9,130
  9,716
  10,325
EBITDA, $m
  263
  365
  485
  624
  782
  960
  1,157
  1,374
  1,610
  1,865
  2,139
  2,430
  2,739
  3,065
  3,408
  3,768
  4,144
  4,537
  4,947
  5,373
  5,817
  6,278
  6,757
  7,255
  7,773
  8,311
  8,871
  9,453
  10,059
  10,690
Interest expense (income), $m
  0
  0
  2
  3
  6
  8
  11
  14
  18
  22
  26
  31
  36
  41
  47
  53
  59
  65
  72
  79
  87
  95
  103
  111
  120
  129
  138
  148
  158
  168
  179
Earnings before tax, $m
  238
  335
  450
  582
  732
  901
  1,088
  1,294
  1,518
  1,760
  2,032
  2,308
  2,601
  2,911
  3,237
  3,578
  3,935
  4,308
  4,696
  5,101
  5,522
  5,959
  6,414
  6,887
  7,378
  7,889
  8,420
  8,972
  9,547
  10,146
Tax expense, $m
  64
  91
  121
  157
  198
  243
  294
  349
  410
  475
  549
  623
  702
  786
  874
  966
  1,062
  1,163
  1,268
  1,377
  1,491
  1,609
  1,732
  1,859
  1,992
  2,130
  2,273
  2,423
  2,578
  2,739
Net income, $m
  174
  245
  328
  425
  534
  657
  794
  945
  1,108
  1,285
  1,483
  1,685
  1,899
  2,125
  2,363
  2,612
  2,873
  3,145
  3,428
  3,724
  4,031
  4,350
  4,682
  5,027
  5,386
  5,759
  6,147
  6,550
  6,970
  7,407

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  663
  846
  1,061
  1,309
  1,591
  1,907
  2,258
  2,643
  3,062
  3,514
  3,999
  4,515
  5,062
  5,639
  6,247
  6,883
  7,549
  8,243
  8,967
  9,721
  10,505
  11,319
  12,166
  13,046
  13,961
  14,912
  15,900
  16,928
  17,998
  19,111
Adjusted assets (=assets-cash), $m
  663
  846
  1,061
  1,309
  1,591
  1,907
  2,258
  2,643
  3,062
  3,514
  3,999
  4,515
  5,062
  5,639
  6,247
  6,883
  7,549
  8,243
  8,967
  9,721
  10,505
  11,319
  12,166
  13,046
  13,961
  14,912
  15,900
  16,928
  17,998
  19,111
Revenue / Adjusted assets
  1.166
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
  1.167
Average production assets, $m
  155
  198
  249
  307
  373
  447
  530
  620
  718
  824
  938
  1,059
  1,187
  1,323
  1,465
  1,615
  1,771
  1,934
  2,103
  2,280
  2,464
  2,655
  2,854
  3,060
  3,275
  3,498
  3,730
  3,971
  4,222
  4,483
Working capital, $m
  62
  79
  99
  122
  149
  178
  211
  247
  286
  328
  373
  422
  473
  526
  583
  643
  705
  770
  837
  908
  981
  1,057
  1,136
  1,218
  1,303
  1,392
  1,484
  1,580
  1,680
  1,784
Total debt, $m
  29
  64
  105
  152
  205
  266
  332
  405
  485
  571
  663
  761
  865
  975
  1,090
  1,211
  1,337
  1,469
  1,607
  1,750
  1,899
  2,054
  2,215
  2,382
  2,556
  2,736
  2,924
  3,119
  3,323
  3,534
Total liabilities, $m
  126
  161
  202
  249
  302
  362
  429
  502
  582
  668
  760
  858
  962
  1,071
  1,187
  1,308
  1,434
  1,566
  1,704
  1,847
  1,996
  2,151
  2,312
  2,479
  2,653
  2,833
  3,021
  3,216
  3,420
  3,631
Total equity, $m
  537
  685
  860
  1,060
  1,289
  1,545
  1,829
  2,141
  2,480
  2,847
  3,239
  3,657
  4,100
  4,568
  5,060
  5,575
  6,114
  6,677
  7,263
  7,874
  8,509
  9,169
  9,855
  10,568
  11,308
  12,078
  12,879
  13,712
  14,578
  15,480
Total liabilities and equity, $m
  663
  846
  1,062
  1,309
  1,591
  1,907
  2,258
  2,643
  3,062
  3,515
  3,999
  4,515
  5,062
  5,639
  6,247
  6,883
  7,548
  8,243
  8,967
  9,721
  10,505
  11,320
  12,167
  13,047
  13,961
  14,911
  15,900
  16,928
  17,998
  19,111
Debt-to-equity ratio
  0.050
  0.090
  0.120
  0.140
  0.160
  0.170
  0.180
  0.190
  0.200
  0.200
  0.200
  0.210
  0.210
  0.210
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
Adjusted equity ratio
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  174
  245
  328
  425
  534
  657
  794
  945
  1,108
  1,285
  1,483
  1,685
  1,899
  2,125
  2,363
  2,612
  2,873
  3,145
  3,428
  3,724
  4,031
  4,350
  4,682
  5,027
  5,386
  5,759
  6,147
  6,550
  6,970
  7,407
Depreciation, amort., depletion, $m
  24
  28
  32
  37
  42
  48
  55
  62
  70
  79
  76
  86
  97
  108
  119
  131
  144
  157
  171
  185
  200
  216
  232
  249
  266
  284
  303
  323
  343
  364
Funds from operations, $m
  198
  273
  360
  461
  576
  706
  849
  1,007
  1,178
  1,364
  1,559
  1,771
  1,996
  2,233
  2,482
  2,743
  3,017
  3,302
  3,599
  3,909
  4,231
  4,566
  4,914
  5,276
  5,652
  6,043
  6,450
  6,873
  7,313
  7,771
Change in working capital, $m
  14
  17
  20
  23
  26
  30
  33
  36
  39
  42
  45
  48
  51
  54
  57
  59
  62
  65
  68
  70
  73
  76
  79
  82
  85
  89
  92
  96
  100
  104
Cash from operations, $m
  184
  256
  340
  438
  550
  676
  816
  971
  1,139
  1,322
  1,514
  1,723
  1,944
  2,179
  2,425
  2,684
  2,954
  3,237
  3,532
  3,839
  4,158
  4,490
  4,835
  5,194
  5,567
  5,954
  6,357
  6,777
  7,213
  7,667
Maintenance CAPEX, $m
  -10
  -13
  -16
  -20
  -25
  -30
  -36
  -43
  -50
  -58
  -67
  -76
  -86
  -97
  -108
  -119
  -131
  -144
  -157
  -171
  -185
  -200
  -216
  -232
  -249
  -266
  -284
  -303
  -323
  -343
New CAPEX, $m
  -36
  -43
  -50
  -58
  -66
  -74
  -82
  -90
  -98
  -106
  -114
  -121
  -128
  -135
  -142
  -149
  -156
  -163
  -170
  -177
  -184
  -191
  -199
  -206
  -215
  -223
  -232
  -241
  -251
  -261
Cash from investing activities, $m
  -46
  -56
  -66
  -78
  -91
  -104
  -118
  -133
  -148
  -164
  -181
  -197
  -214
  -232
  -250
  -268
  -287
  -307
  -327
  -348
  -369
  -391
  -415
  -438
  -464
  -489
  -516
  -544
  -574
  -604
Free cash flow, $m
  138
  200
  274
  360
  459
  571
  698
  837
  991
  1,157
  1,333
  1,526
  1,730
  1,947
  2,175
  2,415
  2,667
  2,930
  3,205
  3,491
  3,789
  4,099
  4,421
  4,756
  5,104
  5,465
  5,841
  6,232
  6,639
  7,063
Issuance/(repayment) of debt, $m
  29
  35
  41
  47
  54
  60
  67
  73
  80
  86
  92
  98
  104
  110
  115
  121
  126
  132
  138
  143
  149
  155
  161
  167
  174
  181
  188
  195
  203
  212
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  29
  35
  41
  47
  54
  60
  67
  73
  80
  86
  92
  98
  104
  110
  115
  121
  126
  132
  138
  143
  149
  155
  161
  167
  174
  181
  188
  195
  203
  212
Total cash flow (excl. dividends), $m
  167
  235
  314
  407
  512
  632
  764
  911
  1,070
  1,243
  1,425
  1,624
  1,834
  2,056
  2,291
  2,536
  2,793
  3,062
  3,342
  3,634
  3,938
  4,253
  4,582
  4,923
  5,277
  5,646
  6,029
  6,428
  6,842
  7,274
Retained Cash Flow (-), $m
  -125
  -149
  -174
  -201
  -228
  -256
  -284
  -312
  -339
  -366
  -392
  -418
  -443
  -468
  -492
  -516
  -539
  -563
  -586
  -610
  -635
  -660
  -686
  -713
  -741
  -770
  -801
  -833
  -866
  -902
Prev. year cash balance distribution, $m
  278
  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
  320
  86
  140
  206
  284
  375
  480
  599
  731
  877
  1,033
  1,205
  1,391
  1,589
  1,799
  2,021
  2,254
  2,499
  2,756
  3,024
  3,303
  3,593
  3,896
  4,210
  4,536
  4,876
  5,228
  5,595
  5,976
  6,372
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
  307
  79
  122
  170
  220
  272
  324
  374
  420
  460
  491
  514
  529
  533
  528
  514
  491
  460
  424
  384
  342
  298
  255
  214
  176
  142
  112
  87
  65
  48
Current shareholders' claim on cash, %
  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
  100.0

ABIOMED, Inc. is a provider of temporary percutaneous mechanical circulatory support devices. The Company offers care to heart failure patients. The Company operates in the segment of the research, development and sale of medical devices to assist or replace the pumping function of the failing heart. The Company develops, manufactures and markets products that are designed to enable the heart to rest, heal and recover by improving blood flow to the coronary arteries and end-organs and/or temporarily performing the pumping function of the heart. The Company's product portfolio includes the Impella 2.5, Impella CP, Impella RP, Impella LD, Impella 5.0 and AB5000. The Company's products are used in the cardiac catheterization lab (cath lab), by interventional cardiologists, the electrophysiology lab, the hybrid lab and in the heart surgery suite by heart surgeons.

FINANCIAL RATIOS  of  ABIOMED, Inc. (ABMD)

Valuation Ratios
P/E Ratio 279.9
Price to Sales 32.7
Price to Book 32.2
Price to Tangible Book
Price to Cash Flow 126.5
Price to Free Cash Flow 223.9
Growth Rates
Sales Growth Rate 34.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 212.5%
Cap. Spend. - 3 Yr. Gr. Rate 75.5%
Financial Strength
Quick Ratio 230
Current Ratio 0
LT Debt to Equity 3.3%
Total Debt to Equity 3.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 10.7%
Ret/ On Assets - 3 Yr. Avg. 20.9%
Return On Total Capital 12.4%
Ret/ On T. Cap. - 3 Yr. Avg. 24.5%
Return On Equity 12.7%
Return On Equity - 3 Yr. Avg. 24.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 84.3%
Gross Margin - 3 Yr. Avg. 83.8%
EBITDA Margin 21.8%
EBITDA Margin - 3 Yr. Avg. 18.9%
Operating Margin 20.2%
Oper. Margin - 3 Yr. Avg. 17.5%
Pre-Tax Margin 20.4%
Pre-Tax Margin - 3 Yr. Avg. 17.7%
Net Profit Margin 11.7%
Net Profit Margin - 3 Yr. Avg. 24.3%
Effective Tax Rate 42.9%
Eff/ Tax Rate - 3 Yr. Avg. -69.3%
Payout Ratio 0%

ABMD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ABMD stock intrinsic value calculation we used $594 million for the last fiscal year's total revenue generated by ABIOMED, Inc.. The default revenue input number comes from 0001 income statement of ABIOMED, Inc.. 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 ABMD stock valuation model: a) initial revenue growth rate of 30.2% 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 ABMD is calculated based on our internal credit rating of ABIOMED, Inc., 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 ABIOMED, Inc..
    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 ABMD stock the variable cost ratio is equal to 54.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $113 million in the base year in the intrinsic value calculation for ABMD 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 ABIOMED, Inc..

Corporate tax rate of 27% is the nominal tax rate for ABIOMED, Inc.. 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 ABMD 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 ABMD are equal to 20.1%.

Life of production assets of 12.3 years is the average useful life of capital assets used in ABIOMED, Inc. 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 ABMD is equal to 8%. 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 - $689.524 million for ABIOMED, Inc. - 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 45.074 million for ABIOMED, Inc. 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 ABIOMED, Inc. at the current share price and the inputted number of shares is $15.0 billion.

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