Intrinsic value of AMAG Pharmaceuticals, Inc. - AMAG

Previous Close

$8.99

  Intrinsic Value

$5.32

stock screener

  Rating & Target

sell

-41%

Previous close

$8.99

 
Intrinsic value

$5.32

 
Up/down potential

-41%

 
Rating

sell

We calculate the intrinsic value of AMAG 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 0.3

 

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, %
  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
  483
  495
  507
  522
  537
  555
  574
  594
  616
  640
  665
  692
  721
  751
  784
  818
  854
  893
  934
  976
  1,022
  1,069
  1,120
  1,173
  1,229
  1,287
  1,349
  1,414
  1,483
  1,555
Variable operating expenses, $m
  779
  797
  818
  841
  866
  894
  925
  957
  993
  1,031
  1,071
  1,114
  1,161
  1,210
  1,262
  1,317
  1,376
  1,438
  1,503
  1,572
  1,645
  1,722
  1,803
  1,888
  1,978
  2,073
  2,173
  2,277
  2,388
  2,504
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
  779
  797
  818
  841
  866
  894
  925
  957
  993
  1,031
  1,071
  1,114
  1,161
  1,210
  1,262
  1,317
  1,376
  1,438
  1,503
  1,572
  1,645
  1,722
  1,803
  1,888
  1,978
  2,073
  2,173
  2,277
  2,388
  2,504
Operating income, $m
  -296
  -303
  -310
  -319
  -329
  -339
  -351
  -363
  -377
  -391
  -406
  -422
  -440
  -459
  -478
  -499
  -521
  -545
  -570
  -596
  -624
  -653
  -683
  -716
  -750
  -786
  -823
  -863
  -905
  -949
EBITDA, $m
  -220
  -225
  -231
  -238
  -245
  -253
  -261
  -271
  -281
  -291
  -303
  -315
  -328
  -342
  -357
  -373
  -389
  -407
  -425
  -445
  -465
  -487
  -510
  -534
  -560
  -586
  -615
  -644
  -675
  -708
Interest expense (income), $m
  62
  29
  30
  31
  32
  33
  34
  36
  38
  39
  41
  43
  46
  48
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  95
  100
  106
  111
  117
Earnings before tax, $m
  -325
  -332
  -341
  -351
  -362
  -374
  -387
  -401
  -416
  -433
  -449
  -468
  -488
  -509
  -531
  -555
  -580
  -607
  -635
  -665
  -696
  -730
  -764
  -801
  -840
  -881
  -924
  -969
  -1,016
  -1,066
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
Net income, $m
  -325
  -332
  -341
  -351
  -362
  -374
  -387
  -401
  -416
  -433
  -449
  -468
  -488
  -509
  -531
  -555
  -580
  -607
  -635
  -665
  -696
  -730
  -764
  -801
  -840
  -881
  -924
  -969
  -1,016
  -1,066

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
  933
  955
  979
  1,007
  1,037
  1,071
  1,107
  1,147
  1,189
  1,235
  1,284
  1,336
  1,391
  1,450
  1,513
  1,579
  1,650
  1,724
  1,802
  1,885
  1,972
  2,064
  2,162
  2,264
  2,372
  2,485
  2,605
  2,730
  2,863
  3,002
Adjusted assets (=assets-cash), $m
  933
  955
  979
  1,007
  1,037
  1,071
  1,107
  1,147
  1,189
  1,235
  1,284
  1,336
  1,391
  1,450
  1,513
  1,579
  1,650
  1,724
  1,802
  1,885
  1,972
  2,064
  2,162
  2,264
  2,372
  2,485
  2,605
  2,730
  2,863
  3,002
Revenue / Adjusted assets
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.519
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
Average production assets, $m
  374
  383
  393
  404
  416
  429
  444
  460
  477
  495
  515
  536
  558
  582
  607
  633
  661
  691
  723
  756
  791
  828
  867
  908
  951
  996
  1,044
  1,095
  1,148
  1,203
Working capital, $m
  -24
  -25
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -59
  -61
  -64
  -67
  -71
  -74
  -78
Total debt, $m
  291
  301
  311
  324
  337
  352
  368
  386
  405
  425
  447
  470
  495
  521
  549
  578
  610
  643
  678
  714
  753
  794
  838
  883
  931
  982
  1,035
  1,091
  1,150
  1,211
Total liabilities, $m
  415
  425
  436
  448
  462
  477
  493
  510
  529
  550
  571
  595
  619
  645
  673
  703
  734
  767
  802
  839
  878
  919
  962
  1,007
  1,055
  1,106
  1,159
  1,215
  1,274
  1,336
Total equity, $m
  518
  530
  544
  559
  576
  594
  615
  637
  660
  685
  713
  741
  772
  805
  840
  877
  915
  957
  1,000
  1,046
  1,095
  1,146
  1,200
  1,256
  1,316
  1,379
  1,446
  1,515
  1,589
  1,666
Total liabilities and equity, $m
  933
  955
  980
  1,007
  1,038
  1,071
  1,108
  1,147
  1,189
  1,235
  1,284
  1,336
  1,391
  1,450
  1,513
  1,580
  1,649
  1,724
  1,802
  1,885
  1,973
  2,065
  2,162
  2,263
  2,371
  2,485
  2,605
  2,730
  2,863
  3,002
Debt-to-equity ratio
  0.560
  0.570
  0.570
  0.580
  0.590
  0.590
  0.600
  0.610
  0.610
  0.620
  0.630
  0.630
  0.640
  0.650
  0.650
  0.660
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.720
  0.720
  0.720
  0.730
Adjusted equity ratio
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555
  0.555

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -325
  -332
  -341
  -351
  -362
  -374
  -387
  -401
  -416
  -433
  -449
  -468
  -488
  -509
  -531
  -555
  -580
  -607
  -635
  -665
  -696
  -730
  -764
  -801
  -840
  -881
  -924
  -969
  -1,016
  -1,066
Depreciation, amort., depletion, $m
  76
  77
  79
  82
  84
  87
  90
  93
  96
  100
  103
  107
  112
  116
  121
  127
  132
  138
  145
  151
  158
  166
  173
  182
  190
  199
  209
  219
  230
  241
Funds from operations, $m
  -249
  -255
  -262
  -269
  -278
  -287
  -297
  -308
  -320
  -333
  -346
  -361
  -376
  -393
  -410
  -429
  -448
  -469
  -491
  -514
  -538
  -564
  -591
  -620
  -650
  -681
  -715
  -750
  -787
  -826
Change in working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
Cash from operations, $m
  -249
  -254
  -261
  -269
  -277
  -286
  -296
  -307
  -319
  -332
  -345
  -359
  -375
  -391
  -409
  -427
  -446
  -467
  -489
  -512
  -536
  -562
  -589
  -617
  -647
  -678
  -712
  -747
  -783
  -822
Maintenance CAPEX, $m
  -73
  -75
  -77
  -79
  -81
  -83
  -86
  -89
  -92
  -95
  -99
  -103
  -107
  -112
  -116
  -121
  -127
  -132
  -138
  -145
  -151
  -158
  -166
  -173
  -182
  -190
  -199
  -209
  -219
  -230
New CAPEX, $m
  -7
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
Cash from investing activities, $m
  -80
  -84
  -87
  -90
  -93
  -96
  -101
  -105
  -109
  -113
  -119
  -124
  -129
  -136
  -141
  -148
  -155
  -162
  -169
  -178
  -186
  -195
  -205
  -214
  -225
  -235
  -247
  -259
  -272
  -286
Free cash flow, $m
  -329
  -338
  -348
  -358
  -370
  -383
  -397
  -412
  -428
  -445
  -464
  -483
  -504
  -526
  -550
  -575
  -601
  -629
  -658
  -689
  -722
  -757
  -793
  -831
  -872
  -914
  -959
  -1,006
  -1,055
  -1,107
Issuance/(repayment) of debt, $m
  8
  10
  11
  12
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  50
  53
  56
  59
  62
Issuance/(repurchase) of shares, $m
  335
  344
  355
  366
  379
  392
  407
  423
  440
  458
  476
  497
  519
  542
  566
  592
  619
  648
  679
  711
  745
  781
  818
  858
  900
  944
  990
  1,038
  1,090
  1,143
Cash from financing (excl. dividends), $m  
  343
  354
  366
  378
  393
  407
  423
  441
  459
  478
  498
  520
  544
  568
  594
  622
  650
  681
  714
  748
  784
  822
  861
  904
  948
  994
  1,043
  1,094
  1,149
  1,205
Total cash flow (excl. dividends), $m
  14
  16
  18
  20
  22
  24
  27
  29
  31
  33
  34
  37
  39
  42
  44
  47
  49
  52
  55
  58
  62
  65
  68
  72
  76
  80
  84
  89
  93
  98
Retained Cash Flow (-), $m
  -335
  -344
  -355
  -366
  -379
  -392
  -407
  -423
  -440
  -458
  -476
  -497
  -519
  -542
  -566
  -592
  -619
  -648
  -679
  -711
  -745
  -781
  -818
  -858
  -900
  -944
  -990
  -1,038
  -1,090
  -1,143
Prev. year cash balance distribution, $m
  239
  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
  -82
  -328
  -337
  -346
  -356
  -368
  -381
  -394
  -409
  -425
  -442
  -460
  -480
  -500
  -522
  -545
  -570
  -596
  -624
  -653
  -683
  -716
  -750
  -786
  -824
  -864
  -906
  -950
  -996
  -1,045
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
  -79
  -301
  -293
  -285
  -276
  -267
  -257
  -246
  -235
  -223
  -210
  -196
  -182
  -168
  -153
  -139
  -124
  -110
  -96
  -83
  -71
  -59
  -49
  -40
  -32
  -25
  -19
  -15
  -11
  -8
Current shareholders' claim on cash, %
  51.4
  26.4
  13.5
  6.9
  3.5
  1.8
  0.9
  0.5
  0.2
  0.1
  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

AMAG Pharmaceuticals, Inc. is a pharmaceutical company. The Company's segment is the manufacture, development and commercialization of products and services for use in treating various conditions, with a focus on maternal health, anemia management and cancer supportive care. Its offerings focus on maternal health, anemia management and cancer supportive care, including its product, Makena (hydroxyprogesterone caproate injection); services related to the collection, processing and storage of umbilical cord blood stem cell and cord tissue units operated through Cord Blood Registry (CBR); its product, Feraheme (ferumoxytol), for intravenous (IV) use, and MuGard Mucoadhesive Oral Wound Rinse. It is engaged in the development of Digoxin immune fab, a polyclonal antibody for the treatment of severe preeclampsia in pregnant women. Makena is a drug indicated to reduce the risk of preterm birth in women pregnant with a single baby having a history of singleton spontaneous preterm birth.

FINANCIAL RATIOS  of  AMAG Pharmaceuticals, Inc. (AMAG)

Valuation Ratios
P/E Ratio -154.4
Price to Sales 0.6
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 1.3
Price to Free Cash Flow 1.3
Growth Rates
Sales Growth Rate 27.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 400%
Cap. Spend. - 3 Yr. Gr. Rate 20.1%
Financial Strength
Quick Ratio 28
Current Ratio 0
LT Debt to Equity 103.4%
Total Debt to Equity 105.7%
Interest Coverage 1
Management Effectiveness
Return On Assets -0.6%
Ret/ On Assets - 3 Yr. Avg. 5.3%
Return On Total Capital -0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.8%
Return On Equity -0.2%
Return On Equity - 3 Yr. Avg. 15.9%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 78%
Gross Margin - 3 Yr. Avg. 80.3%
EBITDA Margin 32.1%
EBITDA Margin - 3 Yr. Avg. 19.8%
Operating Margin 14.8%
Oper. Margin - 3 Yr. Avg. 11.8%
Pre-Tax Margin 1.7%
Pre-Tax Margin - 3 Yr. Avg. -0.8%
Net Profit Margin -0.4%
Net Profit Margin - 3 Yr. Avg. 39.1%
Effective Tax Rate 122.2%
Eff/ Tax Rate - 3 Yr. Avg. 346.6%
Payout Ratio 0%

AMAG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMAG stock intrinsic value calculation we used $474 million for the last fiscal year's total revenue generated by AMAG Pharmaceuticals, Inc.. The default revenue input number comes from 0001 income statement of AMAG Pharmaceuticals, 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 AMAG 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 AMAG is calculated based on our internal credit rating of AMAG Pharmaceuticals, 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 AMAG Pharmaceuticals, 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 AMAG stock the variable cost ratio is equal to 161.2%.

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 AMAG 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 10.2% for AMAG Pharmaceuticals, Inc..

Corporate tax rate of 27% is the nominal tax rate for AMAG Pharmaceuticals, 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 AMAG 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 AMAG are equal to 77.4%.

Life of production assets of 4.2 years is the average useful life of capital assets used in AMAG Pharmaceuticals, 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 AMAG is equal to -5%. 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 - $746.655 million for AMAG Pharmaceuticals, 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 34.713 million for AMAG Pharmaceuticals, 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 AMAG Pharmaceuticals, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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