Intrinsic value of AMAG Pharmaceuticals - AMAG

Previous Close

$21.65

  Intrinsic Value

$37.37

stock screener

  Rating & Target

str. buy

+73%

Previous close

$21.65

 
Intrinsic value

$37.37

 
Up/down potential

+73%

 
Rating

str. buy

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 0.7

 

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, %
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
Revenue, $m
  684
  763
  846
  932
  1,023
  1,118
  1,216
  1,319
  1,426
  1,537
  1,652
  1,772
  1,897
  2,026
  2,161
  2,301
  2,447
  2,598
  2,756
  2,921
  3,093
  3,272
  3,458
  3,653
  3,857
  4,070
  4,292
  4,525
  4,768
  5,023
Variable operating expenses, $m
  573
  630
  690
  752
  817
  886
  957
  1,031
  1,108
  1,188
  1,191
  1,278
  1,368
  1,461
  1,558
  1,659
  1,765
  1,874
  1,988
  2,107
  2,230
  2,359
  2,494
  2,635
  2,782
  2,935
  3,096
  3,263
  3,439
  3,622
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
  573
  630
  690
  752
  817
  886
  957
  1,031
  1,108
  1,188
  1,191
  1,278
  1,368
  1,461
  1,558
  1,659
  1,765
  1,874
  1,988
  2,107
  2,230
  2,359
  2,494
  2,635
  2,782
  2,935
  3,096
  3,263
  3,439
  3,622
Operating income, $m
  111
  133
  156
  180
  205
  232
  259
  288
  318
  349
  461
  494
  529
  565
  603
  642
  682
  725
  769
  814
  862
  912
  964
  1,019
  1,075
  1,135
  1,197
  1,262
  1,330
  1,401
EBITDA, $m
  280
  312
  345
  381
  418
  456
  497
  539
  582
  628
  675
  724
  775
  828
  883
  940
  999
  1,061
  1,126
  1,193
  1,263
  1,336
  1,413
  1,492
  1,576
  1,662
  1,753
  1,848
  1,948
  2,052
Interest expense (income), $m
  62
  58
  69
  80
  92
  104
  117
  131
  145
  160
  175
  191
  208
  225
  243
  261
  281
  301
  322
  344
  366
  390
  415
  440
  467
  495
  524
  555
  587
  620
  655
Earnings before tax, $m
  53
  64
  76
  88
  101
  115
  128
  143
  158
  174
  270
  286
  304
  322
  341
  361
  381
  403
  425
  448
  472
  498
  524
  552
  580
  610
  642
  675
  709
  745
Tax expense, $m
  14
  17
  21
  24
  27
  31
  35
  39
  43
  47
  73
  77
  82
  87
  92
  97
  103
  109
  115
  121
  128
  134
  141
  149
  157
  165
  173
  182
  191
  201
Net income, $m
  39
  47
  56
  64
  74
  84
  94
  104
  115
  127
  197
  209
  222
  235
  249
  263
  278
  294
  310
  327
  345
  363
  383
  403
  424
  446
  469
  493
  518
  544

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
  2,106
  2,347
  2,602
  2,868
  3,147
  3,438
  3,742
  4,058
  4,387
  4,728
  5,083
  5,452
  5,836
  6,235
  6,649
  7,080
  7,528
  7,995
  8,481
  8,988
  9,516
  10,067
  10,642
  11,242
  11,868
  12,523
  13,207
  13,923
  14,672
  15,455
Adjusted assets (=assets-cash), $m
  2,106
  2,347
  2,602
  2,868
  3,147
  3,438
  3,742
  4,058
  4,387
  4,728
  5,083
  5,452
  5,836
  6,235
  6,649
  7,080
  7,528
  7,995
  8,481
  8,988
  9,516
  10,067
  10,642
  11,242
  11,868
  12,523
  13,207
  13,923
  14,672
  15,455
Revenue / Adjusted assets
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
Average production assets, $m
  727
  811
  899
  991
  1,087
  1,188
  1,293
  1,402
  1,515
  1,634
  1,756
  1,884
  2,016
  2,154
  2,297
  2,446
  2,601
  2,762
  2,930
  3,105
  3,288
  3,478
  3,676
  3,884
  4,100
  4,326
  4,563
  4,810
  5,069
  5,339
Working capital, $m
  -107
  -120
  -133
  -146
  -161
  -175
  -191
  -207
  -224
  -241
  -259
  -278
  -298
  -318
  -339
  -361
  -384
  -408
  -433
  -459
  -486
  -514
  -543
  -574
  -606
  -639
  -674
  -710
  -749
  -789
Total debt, $m
  869
  1,012
  1,162
  1,320
  1,485
  1,657
  1,836
  2,023
  2,217
  2,419
  2,629
  2,847
  3,074
  3,309
  3,554
  3,809
  4,074
  4,350
  4,637
  4,936
  5,249
  5,574
  5,914
  6,268
  6,639
  7,026
  7,430
  7,853
  8,295
  8,758
Total liabilities, $m
  1,244
  1,387
  1,538
  1,695
  1,860
  2,032
  2,212
  2,398
  2,592
  2,794
  3,004
  3,222
  3,449
  3,685
  3,930
  4,184
  4,449
  4,725
  5,013
  5,312
  5,624
  5,949
  6,289
  6,644
  7,014
  7,401
  7,806
  8,228
  8,671
  9,134
Total equity, $m
  861
  960
  1,064
  1,173
  1,287
  1,406
  1,530
  1,660
  1,794
  1,934
  2,079
  2,230
  2,387
  2,550
  2,719
  2,896
  3,079
  3,270
  3,469
  3,676
  3,892
  4,117
  4,352
  4,598
  4,854
  5,122
  5,402
  5,694
  6,001
  6,321
Total liabilities and equity, $m
  2,105
  2,347
  2,602
  2,868
  3,147
  3,438
  3,742
  4,058
  4,386
  4,728
  5,083
  5,452
  5,836
  6,235
  6,649
  7,080
  7,528
  7,995
  8,482
  8,988
  9,516
  10,066
  10,641
  11,242
  11,868
  12,523
  13,208
  13,922
  14,672
  15,455
Debt-to-equity ratio
  1.010
  1.050
  1.090
  1.120
  1.150
  1.180
  1.200
  1.220
  1.240
  1.250
  1.260
  1.280
  1.290
  1.300
  1.310
  1.320
  1.320
  1.330
  1.340
  1.340
  1.350
  1.350
  1.360
  1.360
  1.370
  1.370
  1.380
  1.380
  1.380
  1.390
Adjusted equity ratio
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  39
  47
  56
  64
  74
  84
  94
  104
  115
  127
  197
  209
  222
  235
  249
  263
  278
  294
  310
  327
  345
  363
  383
  403
  424
  446
  469
  493
  518
  544
Depreciation, amort., depletion, $m
  169
  179
  189
  201
  212
  225
  237
  251
  265
  279
  214
  230
  246
  263
  280
  298
  317
  337
  357
  379
  401
  424
  448
  474
  500
  528
  556
  587
  618
  651
Funds from operations, $m
  207
  226
  245
  265
  286
  308
  331
  355
  380
  406
  411
  439
  468
  498
  529
  562
  596
  631
  668
  706
  746
  787
  831
  876
  924
  973
  1,025
  1,079
  1,136
  1,195
Change in working capital, $m
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -37
  -38
  -40
Cash from operations, $m
  219
  238
  258
  279
  300
  323
  347
  371
  397
  423
  429
  458
  487
  518
  550
  584
  618
  655
  692
  732
  773
  815
  860
  907
  956
  1,007
  1,060
  1,116
  1,174
  1,235
Maintenance CAPEX, $m
  -79
  -89
  -99
  -110
  -121
  -133
  -145
  -158
  -171
  -185
  -199
  -214
  -230
  -246
  -263
  -280
  -298
  -317
  -337
  -357
  -379
  -401
  -424
  -448
  -474
  -500
  -528
  -556
  -587
  -618
New CAPEX, $m
  -79
  -84
  -88
  -92
  -96
  -101
  -105
  -109
  -114
  -118
  -123
  -127
  -132
  -138
  -143
  -149
  -155
  -161
  -168
  -175
  -182
  -190
  -199
  -207
  -216
  -226
  -236
  -247
  -259
  -271
Cash from investing activities, $m
  -158
  -173
  -187
  -202
  -217
  -234
  -250
  -267
  -285
  -303
  -322
  -341
  -362
  -384
  -406
  -429
  -453
  -478
  -505
  -532
  -561
  -591
  -623
  -655
  -690
  -726
  -764
  -803
  -846
  -889
Free cash flow, $m
  61
  66
  71
  77
  83
  90
  97
  104
  112
  120
  107
  116
  125
  135
  144
  155
  165
  176
  188
  199
  212
  224
  237
  251
  266
  280
  296
  312
  329
  346
Issuance/(repayment) of debt, $m
  134
  143
  150
  158
  165
  172
  179
  187
  194
  202
  210
  218
  227
  236
  245
  255
  265
  276
  287
  299
  312
  326
  340
  355
  370
  387
  404
  423
  442
  463
Issuance/(repurchase) of shares, $m
  55
  52
  48
  45
  40
  35
  30
  25
  19
  13
  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  
  189
  195
  198
  203
  205
  207
  209
  212
  213
  215
  210
  218
  227
  236
  245
  255
  265
  276
  287
  299
  312
  326
  340
  355
  370
  387
  404
  423
  442
  463
Total cash flow (excl. dividends), $m
  250
  261
  270
  279
  288
  298
  307
  316
  326
  335
  317
  334
  352
  370
  389
  409
  430
  452
  475
  499
  524
  550
  577
  606
  636
  667
  700
  735
  771
  809
Retained Cash Flow (-), $m
  -93
  -99
  -104
  -109
  -114
  -119
  -124
  -129
  -134
  -140
  -145
  -151
  -157
  -163
  -169
  -176
  -183
  -191
  -199
  -207
  -216
  -225
  -235
  -245
  -256
  -268
  -280
  -293
  -306
  -320
Prev. year cash balance distribution, $m
  22
  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
  179
  162
  166
  170
  174
  178
  183
  187
  191
  196
  172
  183
  195
  207
  220
  233
  247
  261
  276
  292
  308
  325
  342
  360
  380
  400
  420
  442
  465
  489
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  169
  144
  138
  131
  124
  116
  108
  100
  91
  83
  64
  59
  54
  48
  43
  38
  33
  28
  23
  19
  15
  12
  9
  7
  5
  4
  3
  2
  1
  1
Current shareholders' claim on cash, %
  93.0
  87.4
  82.9
  79.4
  76.6
  74.4
  72.7
  71.5
  70.6
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1
  70.1

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 (AMAG)

Valuation Ratios
P/E Ratio -371.7
Price to Sales 1.4
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 3
Price to Free Cash Flow 3.1
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 $609.946 million for the last fiscal year's total revenue generated by AMAG Pharmaceuticals. The default revenue input number comes from 0001 income statement of AMAG 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 AMAG stock valuation model: a) initial revenue growth rate of 12.2% 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 5.8%, whose default value for AMAG is calculated based on our internal credit rating of AMAG 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 AMAG 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 AMAG stock the variable cost ratio is equal to 85.2%.

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 7.9% for AMAG Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for AMAG 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 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 106.3%.

Life of production assets of 8.2 years is the average useful life of capital assets used in AMAG 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 AMAG is equal to -15.7%. 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 - $790.244 million for AMAG 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 34.327 million for AMAG 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 AMAG Pharmaceuticals at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ AMAG Pharmaceuticals: 2Q Earnings Snapshot   [11:04AM  Associated Press]
▶ [$$] GI Partners Buys Cord Blood Registry and Sperm and Egg Bank   [Jun-15-18 08:33AM  The Wall Street Journal]
▶ AMAG Pharmaceuticals: 1Q Earnings Snapshot   [May-03-18 10:39AM  Associated Press]
▶ Edited Transcript of AMAG presentation 8-Mar-17 3:25pm GMT   [Apr-10-18 03:17PM  Thomson Reuters StreetEvents]
▶ AMAG Pharmaceuticals tops Street 4Q forecasts   [11:05AM  Associated Press]
▶ These 2 Biotech Stocks Are Soaring. Can They Keep It Up?   [Feb-23-18 09:12AM  Motley Fool]
▶ This Biotech Stock Pops 30% On FDA Nod 'Slamming Door' On Woes   [Feb-15-18 04:31PM  Investor's Business Daily]
▶ AMAG Pharmaceuticals reports 3Q loss   [10:37AM  Associated Press]
▶ Should You Buy AMAG Pharmaceuticals Inc (AMAG)?   [Sep-22-17 03:51PM  Simply Wall St.]

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