Intrinsic value of Avid Bioservices, Inc. - CDMO

Previous Close

$4.33

  Intrinsic Value

$13.31

stock screener

  Rating & Target

str. buy

+207%

Previous close

$4.33

 
Intrinsic value

$13.31

 
Up/down potential

+207%

 
Rating

str. buy

We calculate the intrinsic value of CDMO 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, %
  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
  86
  133
  200
  290
  409
  562
  754
  990
  1,274
  1,609
  1,998
  2,443
  2,945
  3,504
  4,120
  4,793
  5,521
  6,303
  7,139
  8,026
  8,964
  9,952
  10,988
  12,073
  13,206
  14,388
  15,619
  16,899
  18,231
  19,615
Variable operating expenses, $m
  83
  127
  189
  273
  384
  527
  706
  926
  1,191
  1,504
  1,864
  2,279
  2,747
  3,269
  3,843
  4,471
  5,150
  5,880
  6,659
  7,487
  8,362
  9,283
  10,250
  11,262
  12,320
  13,422
  14,570
  15,765
  17,007
  18,298
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
  83
  127
  189
  273
  384
  527
  706
  926
  1,191
  1,504
  1,864
  2,279
  2,747
  3,269
  3,843
  4,471
  5,150
  5,880
  6,659
  7,487
  8,362
  9,283
  10,250
  11,262
  12,320
  13,422
  14,570
  15,765
  17,007
  18,298
Operating income, $m
  3
  6
  11
  17
  25
  35
  48
  64
  83
  105
  134
  164
  198
  235
  277
  322
  371
  423
  479
  539
  602
  668
  738
  811
  887
  966
  1,049
  1,135
  1,224
  1,317
EBITDA, $m
  10
  15
  23
  33
  47
  64
  86
  113
  146
  184
  228
  279
  337
  401
  471
  548
  631
  721
  816
  918
  1,025
  1,138
  1,256
  1,380
  1,510
  1,645
  1,786
  1,932
  2,084
  2,243
Interest expense (income), $m
  0
  0
  1
  3
  6
  9
  14
  20
  28
  37
  49
  62
  78
  96
  116
  138
  163
  190
  219
  250
  284
  319
  357
  396
  438
  481
  526
  574
  623
  674
  728
Earnings before tax, $m
  3
  5
  8
  11
  15
  21
  28
  36
  45
  57
  72
  86
  102
  120
  139
  159
  181
  204
  229
  255
  283
  312
  342
  373
  406
  440
  475
  512
  550
  590
Tax expense, $m
  1
  1
  2
  3
  4
  6
  7
  10
  12
  15
  19
  23
  28
  32
  37
  43
  49
  55
  62
  69
  76
  84
  92
  101
  110
  119
  128
  138
  148
  159
Net income, $m
  2
  4
  6
  8
  11
  15
  20
  26
  33
  41
  53
  63
  75
  87
  101
  116
  132
  149
  167
  186
  206
  227
  249
  272
  296
  321
  347
  374
  401
  430

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
  144
  223
  333
  484
  682
  938
  1,259
  1,653
  2,127
  2,687
  3,336
  4,079
  4,917
  5,850
  6,878
  8,001
  9,217
  10,523
  11,918
  13,399
  14,965
  16,614
  18,344
  20,155
  22,048
  24,020
  26,075
  28,213
  30,435
  32,746
Adjusted assets (=assets-cash), $m
  144
  223
  333
  484
  682
  938
  1,259
  1,653
  2,127
  2,687
  3,336
  4,079
  4,917
  5,850
  6,878
  8,001
  9,217
  10,523
  11,918
  13,399
  14,965
  16,614
  18,344
  20,155
  22,048
  24,020
  26,075
  28,213
  30,435
  32,746
Revenue / Adjusted assets
  0.597
  0.596
  0.601
  0.599
  0.600
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
Average production assets, $m
  42
  65
  97
  141
  199
  273
  367
  481
  619
  782
  971
  1,187
  1,431
  1,703
  2,002
  2,329
  2,683
  3,063
  3,469
  3,901
  4,356
  4,836
  5,340
  5,868
  6,418
  6,993
  7,591
  8,213
  8,860
  9,533
Working capital, $m
  -22
  -33
  -50
  -72
  -102
  -140
  -188
  -247
  -317
  -401
  -498
  -608
  -733
  -872
  -1,026
  -1,193
  -1,375
  -1,569
  -1,778
  -1,998
  -2,232
  -2,478
  -2,736
  -3,006
  -3,288
  -3,583
  -3,889
  -4,208
  -4,539
  -4,884
Total debt, $m
  24
  59
  108
  175
  263
  376
  519
  694
  904
  1,153
  1,441
  1,771
  2,143
  2,557
  3,014
  3,512
  4,052
  4,632
  5,251
  5,909
  6,604
  7,336
  8,105
  8,909
  9,749
  10,625
  11,537
  12,486
  13,473
  14,499
Total liabilities, $m
  64
  99
  148
  215
  303
  416
  559
  734
  944
  1,193
  1,481
  1,811
  2,183
  2,597
  3,054
  3,552
  4,092
  4,672
  5,291
  5,949
  6,644
  7,376
  8,145
  8,949
  9,789
  10,665
  11,577
  12,526
  13,513
  14,539
Total equity, $m
  80
  124
  185
  269
  379
  521
  700
  919
  1,183
  1,494
  1,855
  2,268
  2,734
  3,252
  3,824
  4,449
  5,124
  5,851
  6,626
  7,450
  8,320
  9,237
  10,199
  11,206
  12,258
  13,355
  14,498
  15,686
  16,922
  18,207
Total liabilities and equity, $m
  144
  223
  333
  484
  682
  937
  1,259
  1,653
  2,127
  2,687
  3,336
  4,079
  4,917
  5,849
  6,878
  8,001
  9,216
  10,523
  11,917
  13,399
  14,964
  16,613
  18,344
  20,155
  22,047
  24,020
  26,075
  28,212
  30,435
  32,746
Debt-to-equity ratio
  0.300
  0.480
  0.580
  0.650
  0.690
  0.720
  0.740
  0.760
  0.760
  0.770
  0.780
  0.780
  0.780
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
Adjusted equity ratio
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2
  4
  6
  8
  11
  15
  20
  26
  33
  41
  53
  63
  75
  87
  101
  116
  132
  149
  167
  186
  206
  227
  249
  272
  296
  321
  347
  374
  401
  430
Depreciation, amort., depletion, $m
  7
  9
  12
  16
  22
  29
  38
  49
  63
  79
  94
  115
  139
  165
  194
  226
  260
  297
  337
  379
  423
  470
  518
  570
  623
  679
  737
  797
  860
  926
Funds from operations, $m
  9
  13
  18
  24
  33
  44
  58
  76
  96
  120
  147
  178
  214
  253
  296
  342
  393
  447
  504
  565
  629
  697
  768
  842
  919
  1,000
  1,084
  1,171
  1,262
  1,356
Change in working capital, $m
  -8
  -12
  -16
  -22
  -30
  -38
  -48
  -59
  -71
  -83
  -97
  -111
  -125
  -139
  -153
  -167
  -181
  -195
  -208
  -221
  -234
  -246
  -258
  -270
  -282
  -294
  -306
  -319
  -332
  -345
Cash from operations, $m
  17
  24
  34
  47
  63
  83
  106
  134
  167
  203
  244
  289
  338
  392
  449
  510
  574
  641
  712
  786
  863
  943
  1,026
  1,112
  1,202
  1,294
  1,390
  1,490
  1,593
  1,700
Maintenance CAPEX, $m
  -3
  -4
  -6
  -9
  -14
  -19
  -27
  -36
  -47
  -60
  -76
  -94
  -115
  -139
  -165
  -194
  -226
  -260
  -297
  -337
  -379
  -423
  -470
  -518
  -570
  -623
  -679
  -737
  -797
  -860
New CAPEX, $m
  -16
  -23
  -32
  -44
  -58
  -74
  -93
  -115
  -138
  -163
  -189
  -216
  -244
  -272
  -299
  -327
  -354
  -380
  -406
  -431
  -456
  -480
  -504
  -527
  -551
  -574
  -598
  -622
  -647
  -673
Cash from investing activities, $m
  -19
  -27
  -38
  -53
  -72
  -93
  -120
  -151
  -185
  -223
  -265
  -310
  -359
  -411
  -464
  -521
  -580
  -640
  -703
  -768
  -835
  -903
  -974
  -1,045
  -1,121
  -1,197
  -1,277
  -1,359
  -1,444
  -1,533
Free cash flow, $m
  -1
  -3
  -4
  -6
  -9
  -11
  -14
  -16
  -18
  -20
  -21
  -21
  -21
  -19
  -16
  -12
  -6
  1
  9
  18
  28
  40
  53
  66
  81
  97
  113
  131
  149
  168
Issuance/(repayment) of debt, $m
  24
  35
  49
  67
  88
  114
  143
  175
  210
  248
  288
  330
  372
  414
  457
  499
  540
  580
  619
  658
  695
  732
  768
  804
  840
  876
  912
  949
  987
  1,026
Issuance/(repurchase) of shares, $m
  28
  40
  56
  76
  99
  127
  158
  193
  230
  270
  309
  350
  391
  432
  471
  508
  544
  577
  608
  637
  664
  689
  713
  735
  756
  776
  796
  815
  834
  854
Cash from financing (excl. dividends), $m  
  52
  75
  105
  143
  187
  241
  301
  368
  440
  518
  597
  680
  763
  846
  928
  1,007
  1,084
  1,157
  1,227
  1,295
  1,359
  1,421
  1,481
  1,539
  1,596
  1,652
  1,708
  1,764
  1,821
  1,880
Total cash flow (excl. dividends), $m
  50
  72
  100
  136
  179
  229
  287
  352
  423
  499
  576
  658
  742
  827
  912
  995
  1,077
  1,158
  1,236
  1,313
  1,388
  1,461
  1,534
  1,605
  1,677
  1,749
  1,821
  1,895
  1,970
  2,048
Retained Cash Flow (-), $m
  -30
  -44
  -61
  -84
  -110
  -142
  -179
  -219
  -264
  -311
  -361
  -413
  -466
  -519
  -572
  -624
  -676
  -726
  -776
  -824
  -871
  -917
  -962
  -1,007
  -1,052
  -1,097
  -1,142
  -1,189
  -1,236
  -1,284
Prev. year cash balance distribution, $m
  6
  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
  26
  29
  39
  52
  68
  87
  109
  133
  159
  187
  215
  245
  277
  308
  340
  371
  401
  431
  461
  489
  517
  545
  572
  598
  625
  652
  679
  706
  734
  763
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
  25
  26
  34
  43
  53
  63
  73
  83
  91
  98
  102
  105
  105
  103
  100
  94
  87
  79
  71
  62
  53
  45
  37
  30
  24
  19
  15
  11
  8
  6
Current shareholders' claim on cash, %
  88.8
  79.6
  72.2
  66.0
  60.8
  56.5
  52.8
  49.7
  47.0
  44.6
  42.6
  40.9
  39.3
  37.9
  36.7
  35.6
  34.6
  33.8
  33.0
  32.3
  31.6
  31.0
  30.5
  30.0
  29.5
  29.1
  28.7
  28.4
  28.0
  27.7

FINANCIAL RATIOS  of  Avid Bioservices, Inc. (CDMO)

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%

CDMO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CDMO stock intrinsic value calculation we used $54 million for the last fiscal year's total revenue generated by Avid Bioservices, Inc.. The default revenue input number comes from 0001 income statement of Avid Bioservices, Inc.. 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 CDMO 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 CDMO is calculated based on our internal credit rating of Avid Bioservices, Inc., 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 Avid Bioservices, Inc..
    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 CDMO stock the variable cost ratio is equal to 98.1%.

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 CDMO 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 Avid Bioservices, Inc..

Corporate tax rate of 27% is the nominal tax rate for Avid Bioservices, Inc.. 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 CDMO 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 CDMO are equal to 48.6%.

Life of production assets of 10.3 years is the average useful life of capital assets used in Avid Bioservices, Inc. 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 CDMO is equal to -24.9%. 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 - $55.738 million for Avid Bioservices, Inc. - 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 56.074 million for Avid Bioservices, Inc. 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 Avid Bioservices, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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