Intrinsic value of Anika Therapeutics - ANIK

Previous Close

$31.60

  Intrinsic Value

$43.79

stock screener

  Rating & Target

buy

+39%

Previous close

$31.60

 
Intrinsic value

$43.79

 
Up/down potential

+39%

 
Rating

buy

We calculate the intrinsic value of ANIK 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 0.5

 

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
  116
  118
  121
  125
  129
  133
  137
  142
  147
  153
  159
  166
  172
  180
  188
  196
  204
  214
  223
  234
  244
  256
  268
  281
  294
  308
  323
  338
  355
  372
Variable operating expenses, $m
  59
  61
  62
  64
  66
  68
  70
  72
  75
  78
  79
  82
  86
  89
  93
  97
  101
  106
  111
  116
  121
  127
  133
  139
  146
  153
  160
  168
  176
  185
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
  59
  61
  62
  64
  66
  68
  70
  72
  75
  78
  79
  82
  86
  89
  93
  97
  101
  106
  111
  116
  121
  127
  133
  139
  146
  153
  160
  168
  176
  185
Operating income, $m
  56
  58
  59
  61
  63
  65
  67
  70
  72
  75
  80
  83
  87
  91
  94
  99
  103
  108
  112
  118
  123
  129
  135
  141
  148
  155
  163
  170
  179
  187
EBITDA, $m
  62
  64
  65
  67
  69
  71
  74
  76
  79
  82
  85
  89
  93
  96
  101
  105
  110
  115
  120
  125
  131
  137
  144
  151
  158
  165
  173
  182
  190
  200
Interest expense (income), $m
  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
  2
  2
  2
  2
  2
  2
Earnings before tax, $m
  56
  58
  59
  61
  63
  65
  67
  69
  72
  75
  80
  83
  86
  90
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  147
  153
  161
  169
  177
  185
Tax expense, $m
  15
  16
  16
  16
  17
  18
  18
  19
  19
  20
  22
  22
  23
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  38
  40
  41
  43
  46
  48
  50
Net income, $m
  41
  42
  43
  44
  46
  47
  49
  51
  53
  55
  58
  61
  63
  66
  69
  71
  75
  78
  81
  85
  89
  93
  98
  102
  107
  112
  117
  123
  129
  135

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
  142
  145
  149
  153
  158
  163
  168
  174
  181
  188
  195
  203
  211
  220
  230
  240
  251
  262
  274
  286
  300
  314
  328
  344
  360
  377
  396
  415
  435
  456
Adjusted assets (=assets-cash), $m
  142
  145
  149
  153
  158
  163
  168
  174
  181
  188
  195
  203
  211
  220
  230
  240
  251
  262
  274
  286
  300
  314
  328
  344
  360
  377
  396
  415
  435
  456
Revenue / Adjusted assets
  0.817
  0.814
  0.812
  0.817
  0.816
  0.816
  0.815
  0.816
  0.812
  0.814
  0.815
  0.818
  0.815
  0.818
  0.817
  0.817
  0.813
  0.817
  0.814
  0.818
  0.813
  0.815
  0.817
  0.817
  0.817
  0.817
  0.816
  0.814
  0.816
  0.816
Average production assets, $m
  65
  66
  68
  70
  72
  74
  77
  80
  83
  86
  89
  93
  97
  101
  105
  110
  114
  120
  125
  131
  137
  143
  150
  157
  165
  173
  181
  190
  199
  208
Working capital, $m
  37
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  75
  78
  82
  85
  90
  94
  98
  103
  108
  113
  119
Total debt, $m
  0
  1
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  13
  14
  15
  17
  19
  20
  22
  24
  26
  28
  31
  33
  35
  38
  41
  44
Total liabilities, $m
  20
  20
  21
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
Total equity, $m
  122
  125
  128
  132
  136
  140
  145
  150
  156
  162
  168
  175
  182
  190
  198
  207
  216
  226
  236
  247
  258
  270
  283
  296
  311
  325
  341
  357
  375
  393
Total liabilities and equity, $m
  142
  145
  149
  153
  158
  162
  168
  174
  181
  188
  195
  203
  211
  220
  230
  240
  251
  262
  274
  287
  299
  313
  328
  343
  361
  377
  396
  414
  435
  456
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.020
  0.020
  0.020
  0.030
  0.030
  0.040
  0.040
  0.050
  0.050
  0.060
  0.060
  0.060
  0.070
  0.070
  0.080
  0.080
  0.080
  0.090
  0.090
  0.090
  0.100
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
Adjusted equity ratio
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862
  0.862

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  41
  42
  43
  44
  46
  47
  49
  51
  53
  55
  58
  61
  63
  66
  69
  71
  75
  78
  81
  85
  89
  93
  98
  102
  107
  112
  117
  123
  129
  135
Depreciation, amort., depletion, $m
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
Funds from operations, $m
  47
  48
  49
  50
  52
  54
  55
  57
  59
  62
  64
  66
  69
  72
  75
  78
  81
  85
  89
  93
  97
  102
  106
  111
  117
  122
  128
  134
  141
  147
Change in working capital, $m
  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 operations, $m
  46
  47
  48
  49
  51
  52
  54
  56
  58
  60
  62
  64
  67
  69
  72
  75
  79
  82
  86
  90
  94
  98
  103
  107
  112
  118
  123
  129
  135
  142
Maintenance CAPEX, $m
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
New CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
Cash from investing activities, $m
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -18
  -18
  -20
  -20
  -22
Free cash flow, $m
  41
  42
  43
  43
  45
  46
  47
  48
  50
  52
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
  80
  84
  87
  91
  96
  100
  105
  110
  115
  121
Issuance/(repayment) of debt, $m
  0
  0
  1
  1
  1
  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
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  
  0
  0
  1
  1
  1
  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
Total cash flow (excl. dividends), $m
  42
  42
  43
  44
  45
  46
  48
  49
  51
  53
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  85
  89
  94
  98
  103
  107
  112
  118
  124
Retained Cash Flow (-), $m
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
Prev. year cash balance distribution, $m
  144
  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
  183
  39
  40
  40
  41
  42
  43
  44
  45
  47
  48
  49
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  77
  80
  84
  88
  92
  96
  101
  105
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
  175
  36
  35
  33
  32
  30
  29
  28
  26
  25
  23
  21
  19
  18
  16
  15
  13
  11
  10
  9
  7
  6
  5
  4
  3
  3
  2
  1
  1
  1
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

Anika Therapeutics, Inc. is an orthopedic medicines company. The Company is engaged in developing, manufacturing and commercializing products based on its hyaluronic acid (HA) technology. The Company's orthopedic medicine portfolio includes ORTHOVISC, MONOVISC, and CINGAL, which alleviate pain and restore joint function by replenishing depleted HA, and HYALOFAST, a solid HA-based scaffold to aid cartilage repair and regeneration. The Company's therapeutic offerings consist of products in the areas, including Orthobiologics, which includes viscosupplementation and regenerative orthopedic products; Dermal, which includes wound care products; Surgical, which includes products used to prevent post-surgical adhesions, and Other, which includes the Company's ophthalmic and veterinary products. The Company also offers products made from HA based on two other technologies: HYAFF, which is a solid form of HA, and ACP gel, an autocross-linked polymer of HA.

FINANCIAL RATIOS  of  Anika Therapeutics (ANIK)

Valuation Ratios
P/E Ratio 14
Price to Sales 4.5
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 19.3
Price to Free Cash Flow 46.2
Growth Rates
Sales Growth Rate 10.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 55.6%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
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 13.9%
Ret/ On Assets - 3 Yr. Avg. 16.7%
Return On Total Capital 15.2%
Ret/ On T. Cap. - 3 Yr. Avg. 18.4%
Return On Equity 15.2%
Return On Equity - 3 Yr. Avg. 18.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 76.7%
Gross Margin - 3 Yr. Avg. 78.1%
EBITDA Margin 53.4%
EBITDA Margin - 3 Yr. Avg. 57.5%
Operating Margin 48.5%
Oper. Margin - 3 Yr. Avg. 52.9%
Pre-Tax Margin 49.5%
Pre-Tax Margin - 3 Yr. Avg. 53.2%
Net Profit Margin 32%
Net Profit Margin - 3 Yr. Avg. 33.7%
Effective Tax Rate 35.3%
Eff/ Tax Rate - 3 Yr. Avg. 36.5%
Payout Ratio 0%

ANIK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ANIK stock intrinsic value calculation we used $113.42 million for the last fiscal year's total revenue generated by Anika Therapeutics. The default revenue input number comes from 0001 income statement of Anika Therapeutics. 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 ANIK 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 ANIK is calculated based on our internal credit rating of Anika Therapeutics, 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 Anika Therapeutics.
    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 ANIK stock the variable cost ratio is equal to 51.3%.

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 ANIK 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 Anika Therapeutics.

Corporate tax rate of 27% is the nominal tax rate for Anika Therapeutics. 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 ANIK 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 ANIK are equal to 56%.

Life of production assets of 16.9 years is the average useful life of capital assets used in Anika Therapeutics 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 ANIK is equal to 31.9%. 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 - $263.491 million for Anika Therapeutics - 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 14.584 million for Anika Therapeutics 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 Anika Therapeutics at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ Anika: 3Q Earnings Snapshot   [04:17PM  Associated Press]
▶ Novavax (NVAX) Catches Eye: Stock Jumps 7.6%   [Sep-26-18 08:59AM  Zacks]
▶ Anika: 2Q Earnings Snapshot   [Jul-26-18 05:03AM  Associated Press]
▶ Anika Reports Second Quarter 2018 Financial Results   [Jul-25-18 04:05PM  Business Wire]
▶ Anika: 1Q Earnings Snapshot   [May-02-18 06:19PM  Associated Press]
▶ New Strong Sell Stocks for April 16th   [Apr-16-18 07:33AM  Zacks]
▶ New Strong Sell Stocks for April 2nd   [Apr-02-18 04:33AM  Zacks]
▶ Joseph Darling Named CEO and Director of Anika Therapeutics   [Mar-05-18 04:02PM  GlobeNewswire]
▶ Anika Therapeutics, Inc. to Host Earnings Call   [Feb-22-18 07:40AM  ACCESSWIRE]
▶ Anika posts 4Q profit   [Feb-21-18 05:41PM  Associated Press]
▶ 7 Quality Stocks With High Business Predictability Ratings   [Dec-14-17 03:21PM  GuruFocus.com]
▶ Anika posts 3Q profit   [Oct-25-17 05:35PM  Associated Press]

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