Intrinsic value of AVEO Pharmaceuticals - AVEO

Previous Close

$1.85

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$1.85

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of AVEO 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 0.2

 

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, %
  23.40
  21.56
  19.90
  18.41
  17.07
  15.87
  14.78
  13.80
  12.92
  12.13
  11.42
  10.77
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
Revenue, $m
  9
  11
  14
  16
  19
  22
  25
  29
  32
  36
  40
  45
  49
  54
  59
  64
  70
  75
  81
  87
  93
  100
  107
  114
  121
  129
  137
  145
  154
  163
Variable operating expenses, $m
  23
  28
  34
  40
  47
  55
  63
  71
  81
  91
  101
  112
  123
  135
  147
  160
  174
  188
  203
  218
  233
  250
  267
  285
  303
  322
  342
  363
  384
  407
Fixed operating expenses, $m
  28
  28
  29
  29
  30
  31
  31
  32
  33
  34
  34
  35
  36
  37
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
Total operating expenses, $m
  51
  56
  63
  69
  77
  86
  94
  103
  114
  125
  135
  147
  159
  172
  184
  198
  213
  228
  244
  260
  276
  294
  312
  331
  350
  370
  391
  413
  435
  459
Operating income, $m
  -42
  -45
  -49
  -54
  -58
  -64
  -69
  -75
  -81
  -88
  -95
  -102
  -110
  -118
  -126
  -135
  -143
  -153
  -162
  -172
  -183
  -193
  -205
  -216
  -228
  -241
  -254
  -267
  -281
  -296
EBITDA, $m
  -42
  -45
  -49
  -54
  -58
  -64
  -69
  -75
  -81
  -88
  -95
  -102
  -110
  -118
  -126
  -135
  -143
  -153
  -162
  -172
  -183
  -193
  -205
  -216
  -228
  -241
  -254
  -267
  -281
  -296
Interest expense (income), $m
  2
  3
  -3
  -1
  0
  2
  5
  7
  10
  12
  15
  18
  22
  25
  29
  33
  37
  41
  45
  50
  54
  59
  64
  69
  75
  81
  87
  93
  99
  106
  113
Earnings before tax, $m
  -44
  -42
  -48
  -54
  -61
  -68
  -76
  -85
  -94
  -103
  -113
  -124
  -135
  -147
  -159
  -171
  -184
  -198
  -212
  -227
  -242
  -258
  -274
  -291
  -309
  -327
  -346
  -366
  -387
  -409
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
  -44
  -42
  -48
  -54
  -61
  -68
  -76
  -85
  -94
  -103
  -113
  -124
  -135
  -147
  -159
  -171
  -184
  -198
  -212
  -227
  -242
  -258
  -274
  -291
  -309
  -327
  -346
  -366
  -387
  -409

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
  57
  69
  83
  98
  115
  134
  153
  174
  197
  221
  246
  273
  300
  329
  360
  391
  424
  458
  494
  531
  569
  609
  651
  694
  739
  786
  834
  885
  938
  993
Adjusted assets (=assets-cash), $m
  57
  69
  83
  98
  115
  134
  153
  174
  197
  221
  246
  273
  300
  329
  360
  391
  424
  458
  494
  531
  569
  609
  651
  694
  739
  786
  834
  885
  938
  993
Revenue / Adjusted assets
  0.158
  0.159
  0.169
  0.163
  0.165
  0.164
  0.163
  0.167
  0.162
  0.163
  0.163
  0.165
  0.163
  0.164
  0.164
  0.164
  0.165
  0.164
  0.164
  0.164
  0.163
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
Average production assets, $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
Working capital, $m
  -18
  -22
  -26
  -31
  -37
  -42
  -49
  -55
  -62
  -70
  -78
  -86
  -95
  -104
  -114
  -124
  -134
  -145
  -157
  -168
  -181
  -193
  -206
  -220
  -234
  -249
  -264
  -281
  -297
  -315
Total debt, $m
  -21
  -10
  2
  16
  31
  48
  65
  84
  105
  126
  149
  173
  198
  224
  251
  280
  309
  340
  372
  405
  440
  476
  513
  552
  593
  635
  678
  724
  771
  821
Total liabilities, $m
  51
  62
  75
  89
  104
  120
  138
  157
  177
  199
  221
  245
  270
  296
  324
  352
  382
  413
  445
  478
  512
  548
  586
  625
  665
  707
  751
  796
  844
  893
Total equity, $m
  6
  7
  8
  10
  12
  13
  15
  17
  20
  22
  25
  27
  30
  33
  36
  39
  42
  46
  49
  53
  57
  61
  65
  69
  74
  79
  83
  88
  94
  99
Total liabilities and equity, $m
  57
  69
  83
  99
  116
  133
  153
  174
  197
  221
  246
  272
  300
  329
  360
  391
  424
  459
  494
  531
  569
  609
  651
  694
  739
  786
  834
  884
  938
  992
Debt-to-equity ratio
  -3.710
  -1.460
  0.280
  1.640
  2.710
  3.570
  4.270
  4.840
  5.320
  5.720
  6.050
  6.340
  6.590
  6.800
  6.980
  7.150
  7.290
  7.420
  7.530
  7.630
  7.730
  7.810
  7.890
  7.960
  8.020
  8.080
  8.130
  8.180
  8.230
  8.270
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -44
  -42
  -48
  -54
  -61
  -68
  -76
  -85
  -94
  -103
  -113
  -124
  -135
  -147
  -159
  -171
  -184
  -198
  -212
  -227
  -242
  -258
  -274
  -291
  -309
  -327
  -346
  -366
  -387
  -409
Depreciation, amort., depletion, $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
Funds from operations, $m
  -44
  -42
  -48
  -54
  -61
  -68
  -76
  -85
  -94
  -103
  -113
  -124
  -135
  -147
  -159
  -171
  -184
  -198
  -212
  -227
  -242
  -258
  -274
  -291
  -309
  -327
  -346
  -366
  -387
  -409
Change in working capital, $m
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
Cash from operations, $m
  -41
  -38
  -43
  -49
  -55
  -62
  -70
  -78
  -86
  -96
  -105
  -115
  -126
  -137
  -149
  -161
  -174
  -187
  -201
  -215
  -230
  -245
  -261
  -278
  -295
  -313
  -331
  -350
  -370
  -391
Maintenance CAPEX, $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
New CAPEX, $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 investing activities, $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
Free cash flow, $m
  -41
  -38
  -43
  -49
  -55
  -62
  -70
  -78
  -86
  -96
  -105
  -115
  -126
  -137
  -149
  -161
  -174
  -187
  -201
  -215
  -230
  -245
  -261
  -278
  -295
  -313
  -331
  -350
  -370
  -391
Issuance/(repayment) of debt, $m
  -40
  11
  12
  14
  15
  16
  18
  19
  20
  21
  23
  24
  25
  26
  27
  28
  30
  31
  32
  33
  35
  36
  37
  39
  40
  42
  44
  46
  47
  50
Issuance/(repurchase) of shares, $m
  92
  43
  49
  56
  62
  70
  78
  87
  96
  106
  116
  126
  138
  149
  162
  174
  188
  201
  216
  230
  246
  262
  278
  296
  313
  332
  351
  371
  392
  414
Cash from financing (excl. dividends), $m  
  52
  54
  61
  70
  77
  86
  96
  106
  116
  127
  139
  150
  163
  175
  189
  202
  218
  232
  248
  263
  281
  298
  315
  335
  353
  374
  395
  417
  439
  464
Total cash flow (excl. dividends), $m
  12
  16
  18
  20
  22
  24
  26
  28
  30
  31
  33
  35
  37
  38
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
  64
  67
  69
  72
Retained Cash Flow (-), $m
  -92
  -43
  -49
  -56
  -62
  -70
  -78
  -87
  -96
  -106
  -116
  -126
  -138
  -149
  -162
  -174
  -188
  -201
  -216
  -230
  -246
  -262
  -278
  -296
  -313
  -332
  -351
  -371
  -392
  -414
Prev. year cash balance distribution, $m
  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
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
  -79
  -27
  -31
  -35
  -40
  -46
  -52
  -59
  -66
  -74
  -83
  -92
  -101
  -111
  -122
  -133
  -144
  -156
  -169
  -182
  -195
  -209
  -224
  -239
  -254
  -270
  -287
  -305
  -323
  -342
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
  -76
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -38
  -39
  -39
  -39
  -38
  -37
  -36
  -34
  -31
  -29
  -26
  -23
  -20
  -17
  -15
  -12
  -10
  -8
  -6
  -5
  -4
  -3
Current shareholders' claim on cash, %
  50.0
  5.8
  0.7
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

AVEO Pharmaceuticals, Inc. is a biopharmaceutical company. The Company's platform delivers insights into cancer and related disease. The Company's product candidates include Tivozanib, Ficlatuzumab, AV-203 and AV-380. Tivozanib is a selective long half-life vascular endothelial growth factor tyrosine kinase inhibitor (VEGF TKI) that inhibits over three VEGF receptors. Tivozanib is designed to optimize VEGF blockade while minimizing off-target toxicities. Ficlatuzumab is a Hepatocyte Growth Factor (HGF) inhibitory antibody. AV-203 is an anti-ErbB3 monoclonal antibody with ErbB3 affinity. Its preclinical studies suggest that neuregulin1 (NRG1) levels predict AV-203 antitumor activity in preclinical models. AV-380 is a humanized Immunoglobulin G 1 (IgG1) inhibitory monoclonal antibody. AV-380 targets growth differentiating factor 15 (GDF15).

FINANCIAL RATIOS  of  AVEO Pharmaceuticals (AVEO)

Valuation Ratios
P/E Ratio -5.2
Price to Sales 46.8
Price to Book -70.2
Price to Tangible Book
Price to Cash Flow -4.5
Price to Free Cash Flow -4.5
Growth Rates
Sales Growth Rate -84.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 12
Current Ratio 0.2
LT Debt to Equity -600%
Total Debt to Equity -700%
Interest Coverage -13
Management Effectiveness
Return On Assets -73.5%
Ret/ On Assets - 3 Yr. Avg. -47.9%
Return On Total Capital -142.1%
Ret/ On T. Cap. - 3 Yr. Avg. -89%
Return On Equity -360%
Return On Equity - 3 Yr. Avg. -185.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -833.3%
EBITDA Margin - 3 Yr. Avg. -366.4%
Operating Margin -966.7%
Oper. Margin - 3 Yr. Avg. -437.7%
Pre-Tax Margin -900%
Pre-Tax Margin - 3 Yr. Avg. -424.5%
Net Profit Margin -900%
Net Profit Margin - 3 Yr. Avg. -424.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AVEO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AVEO stock intrinsic value calculation we used $7.579 million for the last fiscal year's total revenue generated by AVEO Pharmaceuticals. The default revenue input number comes from 0001 income statement of AVEO 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 AVEO stock valuation model: a) initial revenue growth rate of 23.4% 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 AVEO is calculated based on our internal credit rating of AVEO 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 AVEO 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 AVEO stock the variable cost ratio is equal to 250%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $27 million in the base year in the intrinsic value calculation for AVEO 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 14.6% for AVEO Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for AVEO 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 AVEO 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 AVEO are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in AVEO 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 AVEO is equal to -193.3%. 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 - $-40.763 million for AVEO 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 118.308 million for AVEO 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 AVEO Pharmaceuticals at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
OPHT Ophthotech 1.95 0.26  str.sell
INCY Incyte 65.03 161.51  str.buy
BMY Bristol-Myers 53.27 71.64  hold
AMGN Amgen 192.45 130.16  sell
EXEL Exelixis 17.45 346.27  str.buy
JAZZ Jazz Pharmaceu 143.66 452.15  str.buy

COMPANY NEWS

▶ AVEO: 3Q Earnings Snapshot   [07:21AM  Associated Press]
▶ Why AVEO Pharmaceuticals Inc. Rocketed Higher Today   [Sep-25-18 01:35PM  Motley Fool]
▶ AVEO Oncology to Participate in Upcoming Conferences   [Aug-28-18 07:00AM  Business Wire]
▶ AVEO Announces Proposed Offering of Common Stock   [Aug-16-18 06:34PM  Business Wire]
▶ AVEO: 2Q Earnings Snapshot   [05:07PM  Associated Press]
▶ Here's Why AVEO Pharmaceuticals Inc. Jumped Today   [Jul-23-18 05:54PM  Motley Fool]
▶ Why AVEO Oncology Jumped Higher Today   [Apr-09-18 12:44PM  Motley Fool]
▶ AVEO Oncology to Present at Upcoming Conferences   [Mar-26-18 04:05PM  Business Wire]
▶ AVEO posts 4Q profit   [07:24AM  Associated Press]
▶ AVEO Oncology to Present at Upcoming Conferences   [Feb-07-18 07:00AM  Business Wire]
▶ Here's Why AVEO Oncology Rose as Much as 13.7% Today   [Jan-12-18 03:58PM  Motley Fool]
▶ Whats Installed For AVEO Pharmaceuticals Inc (AVEO)?   [Nov-17-17 01:24PM  Simply Wall St.]
▶ AVEO reports 3Q loss   [08:31AM  Associated Press]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.