Intrinsic value of Avadel Pharmaceuticals plc - AVDL

Previous Close

$1.26

  Intrinsic Value

$17.62

stock screener

  Rating & Target

str. buy

+999%

Previous close

$1.26

 
Intrinsic value

$17.62

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of AVDL 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 0.0

 

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, %
  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
  176
  181
  185
  190
  196
  202
  209
  217
  225
  234
  243
  253
  263
  274
  286
  299
  312
  326
  341
  356
  373
  390
  409
  428
  448
  470
  492
  516
  541
  567
Variable operating expenses, $m
  68
  70
  72
  74
  76
  78
  81
  84
  87
  90
  94
  97
  101
  106
  110
  115
  120
  126
  131
  137
  144
  150
  157
  165
  173
  181
  190
  199
  209
  219
Fixed operating expenses, $m
  50
  51
  52
  53
  55
  56
  57
  58
  60
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
  84
  86
  88
  90
  92
  94
Total operating expenses, $m
  118
  121
  124
  127
  131
  134
  138
  142
  147
  151
  156
  161
  166
  172
  178
  184
  191
  198
  205
  213
  221
  229
  238
  248
  257
  267
  278
  289
  301
  313
Operating income, $m
  58
  59
  61
  63
  66
  68
  71
  75
  78
  82
  87
  92
  97
  102
  108
  114
  121
  128
  135
  143
  152
  161
  170
  181
  191
  203
  215
  227
  241
  255
EBITDA, $m
  61
  62
  64
  66
  69
  72
  75
  78
  82
  86
  91
  95
  101
  106
  112
  119
  125
  133
  140
  149
  157
  167
  176
  187
  198
  209
  222
  235
  249
  263
Interest expense (income), $m
  0
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  20
  21
  22
  23
Earnings before tax, $m
  54
  55
  57
  59
  61
  63
  66
  69
  72
  76
  80
  84
  89
  93
  99
  104
  110
  117
  123
  131
  138
  146
  155
  164
  174
  184
  195
  206
  219
  231
Tax expense, $m
  15
  15
  15
  16
  16
  17
  18
  19
  19
  20
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  40
  42
  44
  47
  50
  53
  56
  59
  62
Net income, $m
  39
  40
  41
  43
  44
  46
  48
  50
  53
  55
  58
  61
  65
  68
  72
  76
  80
  85
  90
  95
  101
  107
  113
  120
  127
  134
  142
  151
  160
  169

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
  251
  256
  263
  270
  279
  288
  297
  308
  319
  332
  345
  359
  374
  390
  406
  424
  443
  463
  484
  506
  530
  554
  581
  608
  637
  667
  699
  733
  769
  806
Adjusted assets (=assets-cash), $m
  251
  256
  263
  270
  279
  288
  297
  308
  319
  332
  345
  359
  374
  390
  406
  424
  443
  463
  484
  506
  530
  554
  581
  608
  637
  667
  699
  733
  769
  806
Revenue / Adjusted assets
  0.701
  0.707
  0.703
  0.704
  0.703
  0.701
  0.704
  0.705
  0.705
  0.705
  0.704
  0.705
  0.703
  0.703
  0.704
  0.705
  0.704
  0.704
  0.705
  0.704
  0.704
  0.704
  0.704
  0.704
  0.703
  0.705
  0.704
  0.704
  0.704
  0.703
Average production assets, $m
  42
  43
  44
  45
  47
  48
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  78
  81
  85
  89
  93
  97
  102
  107
  112
  117
  123
  129
  135
Working capital, $m
  -58
  -59
  -61
  -62
  -64
  -66
  -68
  -71
  -74
  -76
  -79
  -83
  -86
  -90
  -94
  -98
  -102
  -107
  -111
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -161
  -169
  -177
  -186
Total debt, $m
  78
  81
  86
  91
  97
  103
  109
  117
  124
  133
  142
  151
  161
  172
  184
  196
  209
  222
  237
  252
  268
  285
  303
  321
  341
  362
  384
  407
  431
  456
Total liabilities, $m
  171
  175
  179
  184
  190
  196
  203
  210
  218
  226
  235
  245
  255
  266
  277
  289
  302
  316
  330
  345
  361
  378
  396
  415
  434
  455
  477
  500
  524
  550
Total equity, $m
  80
  82
  84
  86
  89
  91
  95
  98
  102
  105
  110
  114
  119
  124
  129
  135
  141
  147
  154
  161
  168
  176
  185
  193
  203
  212
  222
  233
  244
  256
Total liabilities and equity, $m
  251
  257
  263
  270
  279
  287
  298
  308
  320
  331
  345
  359
  374
  390
  406
  424
  443
  463
  484
  506
  529
  554
  581
  608
  637
  667
  699
  733
  768
  806
Debt-to-equity ratio
  0.970
  1.000
  1.030
  1.060
  1.090
  1.120
  1.160
  1.190
  1.230
  1.260
  1.290
  1.330
  1.360
  1.390
  1.420
  1.450
  1.480
  1.510
  1.540
  1.560
  1.590
  1.610
  1.640
  1.660
  1.680
  1.700
  1.720
  1.740
  1.760
  1.780
Adjusted equity ratio
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  39
  40
  41
  43
  44
  46
  48
  50
  53
  55
  58
  61
  65
  68
  72
  76
  80
  85
  90
  95
  101
  107
  113
  120
  127
  134
  142
  151
  160
  169
Depreciation, amort., depletion, $m
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
Funds from operations, $m
  42
  43
  44
  46
  48
  49
  51
  54
  56
  59
  62
  65
  68
  72
  76
  80
  85
  90
  95
  101
  106
  113
  119
  126
  134
  141
  150
  158
  168
  177
Change in working capital, $m
  -1
  -1
  -2
  -2
  -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
Cash from operations, $m
  44
  45
  46
  48
  49
  51
  54
  56
  59
  62
  65
  68
  72
  76
  80
  85
  89
  94
  100
  106
  112
  118
  125
  132
  140
  148
  157
  166
  176
  186
Maintenance CAPEX, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from investing activities, $m
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -9
  -9
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
Free cash flow, $m
  40
  41
  42
  44
  45
  47
  49
  51
  54
  56
  59
  62
  66
  69
  73
  77
  82
  87
  92
  97
  103
  109
  115
  122
  129
  137
  145
  153
  162
  172
Issuance/(repayment) of debt, $m
  3
  4
  4
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
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  
  3
  4
  4
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Total cash flow (excl. dividends), $m
  43
  45
  47
  49
  51
  53
  56
  59
  62
  65
  68
  72
  76
  80
  85
  90
  95
  100
  106
  112
  119
  126
  133
  141
  149
  157
  167
  176
  186
  197
Retained Cash Flow (-), $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
Prev. year cash balance distribution, $m
  8
  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
  49
  43
  45
  46
  48
  50
  53
  55
  58
  61
  64
  67
  71
  75
  79
  84
  89
  94
  99
  105
  111
  118
  125
  132
  140
  148
  156
  165
  175
  185
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
  47
  40
  39
  38
  37
  37
  36
  34
  33
  32
  30
  29
  27
  25
  23
  21
  19
  17
  15
  13
  11
  10
  8
  7
  5
  4
  3
  3
  2
  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

Avadel Pharmaceuticals plc develops and commercializes pharmaceutical products based on its proprietary drug delivery technology for primary care and sterile injectable markets in the United States, France, and Ireland. The company’s owns and develops drug delivery platforms, such as Micropump, a microparticulate system that allows the development of modified and/or controlled release of solid and oral dosage formulations of drugs; LiquiTime, which allows development of modified/controlled release liquid suspension formulations; Trigger Lock that provide a controlled release of opioid analge sics while deterring abuse; and Medusa, a hydrogel depot technology used for the development of subcutaneously administered drug formulations. Its hospital based products include Bloxiverz, a drug used intravenously in the operating room for the reversal of the effects of non-depolarizing neuromuscular blocking agents after surgery; Vazculep, a phenylephrine hydrochloride injection used to treat hypotension resulting primarily from vasodilation in the setting of anesthesia; and Akovaz, a ephedrine sulfate injection. The company’s pediatrics products include Karbinal ER, an H1 receptor antagonist used to treat seasonal and perennial allergic rhinitis; AcipHex Sprinkle for the treatment of gastroesophageal reflux disease; Flexichamber, a collapsible holding chamber that administers aerosolized medication from pressurized metered dose inhalers; and Cefaclor for the treatment of otitis media, lower respiratory infections, pharyngitis and tonsillitis, urinary tract infections, and skin and skin structure infections. Its product candidates comprise Sodium Oxybate for narcolepsy; Hydromorphone/Trigger Lock for pain; Exenatide/Medusa for diabetes; and LiquiTime for cough/cold. The company was formerly known as Flamel Technologies SA and changed its name to Avadel Pharmaceuticals plc in January 2017. The company was founded in 1990 and is headquartered in Dublin, Ireland.

FINANCIAL RATIOS  of  Avadel Pharmaceuticals plc (AVDL)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AVDL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AVDL stock intrinsic value calculation we used $173 million for the last fiscal year's total revenue generated by Avadel Pharmaceuticals plc. The default revenue input number comes from 0001 income statement of Avadel Pharmaceuticals plc. 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 AVDL 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 AVDL is calculated based on our internal credit rating of Avadel Pharmaceuticals plc, 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 Avadel Pharmaceuticals plc.
    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 AVDL stock the variable cost ratio is equal to 38.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $49 million in the base year in the intrinsic value calculation for AVDL 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 Avadel Pharmaceuticals plc.

Corporate tax rate of 27% is the nominal tax rate for Avadel Pharmaceuticals plc. 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 AVDL 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 AVDL are equal to 23.8%.

Life of production assets of 16.2 years is the average useful life of capital assets used in Avadel Pharmaceuticals plc 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 AVDL is equal to -32.7%. 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 - $85.58 million for Avadel Pharmaceuticals plc - 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 37.012 million for Avadel Pharmaceuticals plc 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 Avadel Pharmaceuticals plc at the current share price and the inputted number of shares is $0.0 billion.

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