Intrinsic value of AVEO Pharmaceuticals - AVEO

Previous Close

$2.93

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.93

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -84.21
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  3
  5
  7
  11
  16
  23
  31
  42
  55
  71
  89
  111
  136
  164
  195
  229
  266
  307
  350
  397
  446
  498
  553
  610
  671
  734
  799
  868
  939
  1,013
  1,090
Variable operating expenses, $m
 
  8
  12
  18
  27
  38
  52
  70
  92
  118
  149
  185
  226
  273
  325
  382
  444
  511
  584
  661
  743
  830
  922
  1,018
  1,118
  1,223
  1,333
  1,446
  1,565
  1,688
  1,817
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
  32
  8
  12
  18
  27
  38
  52
  70
  92
  118
  149
  185
  226
  273
  325
  382
  444
  511
  584
  661
  743
  830
  922
  1,018
  1,118
  1,223
  1,333
  1,446
  1,565
  1,688
  1,817
Operating income, $m
  -29
  -3
  -5
  -7
  -11
  -15
  -21
  -28
  -37
  -47
  -60
  -74
  -91
  -109
  -130
  -153
  -178
  -205
  -234
  -265
  -297
  -332
  -369
  -407
  -447
  -489
  -533
  -579
  -626
  -676
  -727
EBITDA, $m
  -29
  -3
  -5
  -7
  -11
  -15
  -21
  -28
  -37
  -47
  -60
  -74
  -91
  -109
  -130
  -153
  -178
  -205
  -234
  -265
  -297
  -332
  -369
  -407
  -447
  -489
  -533
  -579
  -626
  -676
  -727
Interest expense (income), $m
  2
  2
  -2
  -1
  0
  1
  2
  4
  6
  9
  12
  16
  21
  26
  32
  38
  45
  53
  61
  71
  80
  90
  101
  113
  125
  137
  151
  164
  179
  193
  209
Earnings before tax, $m
  -27
  -5
  -3
  -6
  -10
  -16
  -23
  -32
  -43
  -56
  -72
  -90
  -111
  -135
  -161
  -191
  -223
  -258
  -295
  -335
  -378
  -423
  -470
  -520
  -572
  -627
  -684
  -743
  -805
  -869
  -936
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
  0
Net income, $m
  -27
  -5
  -3
  -6
  -10
  -16
  -23
  -32
  -43
  -56
  -72
  -90
  -111
  -135
  -161
  -191
  -223
  -258
  -295
  -335
  -378
  -423
  -470
  -520
  -572
  -627
  -684
  -743
  -805
  -869
  -936

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  23
  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
  27
  6
  10
  15
  21
  30
  42
  56
  73
  94
  119
  148
  181
  218
  260
  305
  355
  409
  467
  529
  595
  664
  737
  814
  894
  978
  1,066
  1,157
  1,252
  1,350
  1,453
Adjusted assets (=assets-cash), $m
  4
  6
  10
  15
  21
  30
  42
  56
  73
  94
  119
  148
  181
  218
  260
  305
  355
  409
  467
  529
  595
  664
  737
  814
  894
  978
  1,066
  1,157
  1,252
  1,350
  1,453
Revenue / Adjusted assets
  0.750
  0.833
  0.700
  0.733
  0.762
  0.767
  0.738
  0.750
  0.753
  0.755
  0.748
  0.750
  0.751
  0.752
  0.750
  0.751
  0.749
  0.751
  0.749
  0.750
  0.750
  0.750
  0.750
  0.749
  0.751
  0.751
  0.750
  0.750
  0.750
  0.750
  0.750
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
  0
Working capital, $m
  16
  -8
  -12
  -18
  -27
  -38
  -52
  -70
  -92
  -118
  -149
  -185
  -226
  -273
  -325
  -382
  -444
  -511
  -584
  -661
  -743
  -830
  -922
  -1,018
  -1,118
  -1,223
  -1,333
  -1,446
  -1,565
  -1,688
  -1,817
Total debt, $m
  14
  -9
  -6
  -2
  4
  12
  22
  35
  51
  70
  92
  118
  148
  181
  219
  260
  305
  353
  405
  461
  520
  583
  648
  718
  790
  865
  944
  1,026
  1,112
  1,200
  1,293
Total liabilities, $m
  29
  6
  9
  13
  19
  27
  37
  50
  66
  85
  107
  133
  163
  196
  234
  275
  320
  368
  420
  476
  535
  598
  663
  733
  805
  880
  959
  1,041
  1,127
  1,215
  1,308
Total equity, $m
  -2
  1
  1
  1
  2
  3
  4
  6
  7
  9
  12
  15
  18
  22
  26
  31
  36
  41
  47
  53
  59
  66
  74
  81
  89
  98
  107
  116
  125
  135
  145
Total liabilities and equity, $m
  27
  7
  10
  14
  21
  30
  41
  56
  73
  94
  119
  148
  181
  218
  260
  306
  356
  409
  467
  529
  594
  664
  737
  814
  894
  978
  1,066
  1,157
  1,252
  1,350
  1,453
Debt-to-equity ratio
  -7.000
  -14.440
  -6.170
  -1.140
  2.010
  4.040
  5.400
  6.310
  6.950
  7.410
  7.740
  7.990
  8.170
  8.310
  8.420
  8.510
  8.580
  8.630
  8.680
  8.720
  8.750
  8.770
  8.800
  8.820
  8.830
  8.850
  8.860
  8.870
  8.880
  8.890
  8.900
Adjusted equity ratio
  -6.250
  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
  -27
  -5
  -3
  -6
  -10
  -16
  -23
  -32
  -43
  -56
  -72
  -90
  -111
  -135
  -161
  -191
  -223
  -258
  -295
  -335
  -378
  -423
  -470
  -520
  -572
  -627
  -684
  -743
  -805
  -869
  -936
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
  0
Funds from operations, $m
  -32
  -5
  -3
  -6
  -10
  -16
  -23
  -32
  -43
  -56
  -72
  -90
  -111
  -135
  -161
  -191
  -223
  -258
  -295
  -335
  -378
  -423
  -470
  -520
  -572
  -627
  -684
  -743
  -805
  -869
  -936
Change in working capital, $m
  -1
  -3
  -4
  -6
  -8
  -11
  -14
  -18
  -22
  -26
  -31
  -36
  -41
  -46
  -52
  -57
  -62
  -67
  -72
  -77
  -82
  -87
  -91
  -96
  -100
  -105
  -109
  -114
  -119
  -123
  -128
Cash from operations, $m
  -31
  -2
  1
  0
  -2
  -5
  -9
  -14
  -21
  -30
  -41
  -54
  -70
  -88
  -110
  -134
  -160
  -190
  -223
  -258
  -295
  -336
  -379
  -424
  -472
  -522
  -574
  -629
  -686
  -746
  -808
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
  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
  0
Cash from investing activities, $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
  0
Free cash flow, $m
  -32
  -2
  1
  0
  -2
  -5
  -9
  -14
  -21
  -30
  -41
  -54
  -70
  -88
  -110
  -134
  -160
  -190
  -223
  -258
  -295
  -336
  -379
  -424
  -472
  -522
  -574
  -629
  -686
  -746
  -808
Issuance/(repayment) of debt, $m
  5
  -21
  3
  4
  6
  8
  10
  13
  16
  19
  22
  26
  30
  33
  37
  41
  45
  49
  52
  56
  59
  63
  66
  69
  72
  76
  79
  82
  85
  89
  92
Issuance/(repurchase) of shares, $m
  15
  29
  4
  7
  11
  17
  24
  33
  45
  58
  74
  93
  114
  139
  166
  195
  228
  263
  301
  341
  384
  430
  477
  528
  580
  635
  693
  752
  814
  879
  946
Cash from financing (excl. dividends), $m  
  20
  8
  7
  11
  17
  25
  34
  46
  61
  77
  96
  119
  144
  172
  203
  236
  273
  312
  353
  397
  443
  493
  543
  597
  652
  711
  772
  834
  899
  968
  1,038
Total cash flow (excl. dividends), $m
  -12
  5
  8
  11
  15
  20
  26
  32
  39
  47
  56
  65
  74
  84
  93
  103
  112
  121
  130
  139
  148
  156
  165
  173
  181
  189
  197
  205
  213
  222
  231
Retained Cash Flow (-), $m
  19
  -29
  -4
  -7
  -11
  -17
  -24
  -33
  -45
  -58
  -74
  -93
  -114
  -139
  -166
  -195
  -228
  -263
  -301
  -341
  -384
  -430
  -477
  -528
  -580
  -635
  -693
  -752
  -814
  -879
  -946
Prev. year cash balance distribution, $m
 
  21
  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
 
  -3
  4
  4
  4
  3
  1
  -1
  -5
  -11
  -18
  -28
  -40
  -55
  -72
  -93
  -116
  -142
  -170
  -202
  -236
  -273
  -313
  -355
  -399
  -446
  -496
  -547
  -601
  -657
  -715
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
 
  -2
  4
  4
  3
  2
  1
  -1
  -3
  -6
  -10
  -13
  -17
  -21
  -24
  -27
  -29
  -31
  -31
  -31
  -30
  -28
  -26
  -23
  -20
  -17
  -14
  -12
  -9
  -7
  -5
Current shareholders' claim on cash, %
  100
  50.0
  7.4
  0.9
  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 -8.2
Price to Sales 74.1
Price to Book -111.1
Price to Tangible Book
Price to Cash Flow -7.2
Price to Free Cash Flow -7.2
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 $3 million for the last fiscal year's total revenue generated by AVEO Pharmaceuticals. The default revenue input number comes from 2016 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 60% 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 166.7%.

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 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 17.4% 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 10 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 -166.7%. 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 - $-2 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 121.699 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 $0.4 billion.

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COMPANY NEWS

▶ 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]
▶ AVEO Oncology to Present at Upcoming Conferences   [Sep-05-17 07:00AM  Business Wire]
▶ AVEO reports 2Q loss   [Aug-09-17 10:09PM  Associated Press]
▶ LD Micro Index Reconstitution as of August 1, 2017   [Aug-01-17 09:40AM  ACCESSWIRE]
▶ Here's Why AVEO Oncology Rose as Much as 15% Today   [Jul-19-17 02:01PM  Motley Fool]
▶ Here's Why AVEO Oncology Fell as Much as 12.7% Today   [Jul-11-17 04:21PM  Motley Fool]
▶ Company News for July 10, 2017   [Jul-10-17 10:13AM  Zacks]
▶ Here's Why AVEO Oncology Rose As Much As 13.8% Today   [Jun-27-17 04:30PM  Motley Fool]
▶ Biotech Stocks Showing Signs of Resurgence   [Jun-26-17 08:30AM  PR Newswire]
▶ AVEO reports 1Q loss   [May-04-17 08:58AM  Associated Press]
▶ AVEO Announces Milestone Payment from CANbridge for AV-203   [Apr-03-17 07:00AM  Business Wire]
▶ GGP, CenturyLink Drop into Tuesdays 52-Week Low Club   [Mar-28-17 04:04PM  24/7 Wall St.]
▶ AVEO reports 4Q loss   [Mar-22-17 04:22PM  Associated Press]
Financial statements of AVEO
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