Intrinsic value of CareDx, Inc. - CDNA

Previous Close

$36.92

  Intrinsic Value

$15.60

stock screener

  Rating & Target

str. sell

-58%

Previous close

$36.92

 
Intrinsic value

$15.60

 
Up/down potential

-58%

 
Rating

str. sell

We calculate the intrinsic value of CDNA 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 1.5

 

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, %
  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
  123
  190
  285
  413
  583
  801
  1,075
  1,412
  1,817
  2,295
  2,850
  3,484
  4,199
  4,996
  5,875
  6,834
  7,872
  8,988
  10,179
  11,444
  12,782
  14,190
  15,668
  17,215
  18,831
  20,517
  22,271
  24,097
  25,996
  27,969
Variable operating expenses, $m
  102
  158
  235
  341
  482
  662
  888
  1,166
  1,501
  1,895
  2,353
  2,877
  3,468
  4,126
  4,852
  5,643
  6,501
  7,422
  8,406
  9,451
  10,555
  11,718
  12,939
  14,217
  15,551
  16,943
  18,392
  19,900
  21,467
  23,097
Fixed operating expenses, $m
  29
  29
  30
  31
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  54
Total operating expenses, $m
  131
  187
  265
  372
  513
  694
  921
  1,199
  1,535
  1,930
  2,389
  2,913
  3,505
  4,164
  4,891
  5,683
  6,542
  7,463
  8,448
  9,494
  10,599
  11,763
  12,985
  14,264
  15,599
  16,992
  18,442
  19,951
  21,520
  23,151
Operating income, $m
  -8
  4
  19
  41
  70
  107
  154
  212
  282
  365
  461
  571
  694
  832
  985
  1,151
  1,331
  1,524
  1,731
  1,950
  2,182
  2,427
  2,683
  2,952
  3,232
  3,525
  3,829
  4,146
  4,476
  4,818
EBITDA, $m
  -4
  9
  28
  53
  87
  131
  186
  254
  335
  432
  544
  672
  816
  977
  1,155
  1,349
  1,559
  1,785
  2,026
  2,283
  2,554
  2,839
  3,138
  3,452
  3,779
  4,120
  4,476
  4,846
  5,231
  5,631
Interest expense (income), $m
  1
  0
  5
  11
  20
  33
  50
  71
  98
  131
  170
  217
  271
  334
  404
  482
  568
  662
  763
  872
  989
  1,113
  1,244
  1,382
  1,527
  1,678
  1,836
  2,001
  2,173
  2,352
  2,538
Earnings before tax, $m
  -8
  -1
  8
  21
  37
  58
  83
  114
  151
  194
  244
  299
  361
  429
  503
  583
  669
  761
  858
  961
  1,069
  1,183
  1,301
  1,425
  1,554
  1,688
  1,828
  1,973
  2,124
  2,280
Tax expense, $m
  0
  0
  2
  6
  10
  16
  23
  31
  41
  52
  66
  81
  97
  116
  136
  157
  181
  205
  232
  260
  289
  319
  351
  385
  420
  456
  494
  533
  573
  616
Net income, $m
  -8
  -1
  6
  15
  27
  42
  61
  84
  110
  142
  178
  218
  263
  313
  367
  426
  488
  555
  627
  702
  781
  863
  950
  1,040
  1,134
  1,232
  1,334
  1,440
  1,550
  1,665

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
  137
  211
  316
  458
  646
  888
  1,192
  1,565
  2,014
  2,544
  3,159
  3,863
  4,656
  5,539
  6,513
  7,576
  8,727
  9,964
  11,285
  12,688
  14,171
  15,732
  17,371
  19,086
  20,877
  22,746
  24,691
  26,715
  28,820
  31,008
Adjusted assets (=assets-cash), $m
  137
  211
  316
  458
  646
  888
  1,192
  1,565
  2,014
  2,544
  3,159
  3,863
  4,656
  5,539
  6,513
  7,576
  8,727
  9,964
  11,285
  12,688
  14,171
  15,732
  17,371
  19,086
  20,877
  22,746
  24,691
  26,715
  28,820
  31,008
Revenue / Adjusted assets
  0.898
  0.900
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
  0.902
Average production assets, $m
  41
  64
  95
  138
  195
  268
  359
  472
  607
  766
  952
  1,164
  1,403
  1,669
  1,962
  2,283
  2,629
  3,002
  3,400
  3,822
  4,269
  4,740
  5,233
  5,750
  6,290
  6,853
  7,439
  8,049
  8,683
  9,342
Working capital, $m
  -5
  -8
  -12
  -17
  -24
  -34
  -45
  -59
  -76
  -96
  -120
  -146
  -176
  -210
  -247
  -287
  -331
  -377
  -428
  -481
  -537
  -596
  -658
  -723
  -791
  -862
  -935
  -1,012
  -1,092
  -1,175
Total debt, $m
  21
  51
  94
  152
  228
  327
  450
  602
  785
  1,001
  1,251
  1,537
  1,860
  2,220
  2,616
  3,049
  3,517
  4,021
  4,558
  5,129
  5,733
  6,368
  7,035
  7,733
  8,462
  9,223
  10,015
  10,838
  11,695
  12,585
Total liabilities, $m
  56
  86
  128
  186
  263
  361
  485
  637
  820
  1,035
  1,286
  1,572
  1,895
  2,254
  2,651
  3,084
  3,552
  4,055
  4,593
  5,164
  5,767
  6,403
  7,070
  7,768
  8,497
  9,257
  10,049
  10,873
  11,730
  12,620
Total equity, $m
  81
  125
  187
  272
  383
  527
  707
  928
  1,194
  1,509
  1,873
  2,290
  2,761
  3,285
  3,862
  4,493
  5,175
  5,909
  6,692
  7,524
  8,403
  9,329
  10,301
  11,318
  12,380
  13,488
  14,642
  15,842
  17,090
  18,388
Total liabilities and equity, $m
  137
  211
  315
  458
  646
  888
  1,192
  1,565
  2,014
  2,544
  3,159
  3,862
  4,656
  5,539
  6,513
  7,577
  8,727
  9,964
  11,285
  12,688
  14,170
  15,732
  17,371
  19,086
  20,877
  22,745
  24,691
  26,715
  28,820
  31,008
Debt-to-equity ratio
  0.260
  0.410
  0.500
  0.560
  0.600
  0.620
  0.640
  0.650
  0.660
  0.660
  0.670
  0.670
  0.670
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
Adjusted equity ratio
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593
  0.593

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -8
  -1
  6
  15
  27
  42
  61
  84
  110
  142
  178
  218
  263
  313
  367
  426
  488
  555
  627
  702
  781
  863
  950
  1,040
  1,134
  1,232
  1,334
  1,440
  1,550
  1,665
Depreciation, amort., depletion, $m
  4
  6
  9
  12
  17
  24
  32
  41
  53
  67
  83
  101
  122
  145
  171
  198
  229
  261
  296
  332
  371
  412
  455
  500
  547
  596
  647
  700
  755
  812
Funds from operations, $m
  -4
  5
  15
  27
  44
  66
  93
  125
  164
  209
  261
  319
  385
  458
  538
  624
  717
  817
  922
  1,034
  1,152
  1,275
  1,405
  1,540
  1,681
  1,828
  1,981
  2,140
  2,305
  2,477
Change in working capital, $m
  -2
  -3
  -4
  -5
  -7
  -9
  -12
  -14
  -17
  -20
  -23
  -27
  -30
  -33
  -37
  -40
  -44
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -77
  -80
  -83
Cash from operations, $m
  -2
  8
  19
  33
  51
  75
  104
  139
  181
  229
  284
  346
  415
  492
  575
  664
  761
  863
  972
  1,087
  1,208
  1,335
  1,467
  1,605
  1,749
  1,899
  2,055
  2,217
  2,385
  2,560
Maintenance CAPEX, $m
  -2
  -4
  -6
  -8
  -12
  -17
  -23
  -31
  -41
  -53
  -67
  -83
  -101
  -122
  -145
  -171
  -198
  -229
  -261
  -296
  -332
  -371
  -412
  -455
  -500
  -547
  -596
  -647
  -700
  -755
New CAPEX, $m
  -15
  -22
  -32
  -43
  -57
  -73
  -92
  -112
  -135
  -160
  -185
  -212
  -239
  -266
  -293
  -320
  -347
  -373
  -398
  -423
  -447
  -470
  -494
  -517
  -540
  -563
  -586
  -610
  -634
  -659
Cash from investing activities, $m
  -17
  -26
  -38
  -51
  -69
  -90
  -115
  -143
  -176
  -213
  -252
  -295
  -340
  -388
  -438
  -491
  -545
  -602
  -659
  -719
  -779
  -841
  -906
  -972
  -1,040
  -1,110
  -1,182
  -1,257
  -1,334
  -1,414
Free cash flow, $m
  -19
  -18
  -18
  -18
  -17
  -15
  -11
  -5
  4
  16
  32
  52
  75
  103
  136
  173
  215
  262
  313
  369
  429
  493
  561
  633
  709
  789
  873
  960
  1,051
  1,146
Issuance/(repayment) of debt, $m
  21
  30
  43
  58
  77
  99
  124
  152
  183
  216
  250
  286
  323
  360
  396
  433
  468
  503
  538
  571
  603
  635
  667
  698
  729
  760
  792
  824
  857
  890
Issuance/(repurchase) of shares, $m
  38
  45
  56
  69
  85
  101
  119
  138
  156
  172
  187
  199
  207
  211
  210
  205
  194
  178
  157
  130
  99
  63
  22
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  59
  75
  99
  127
  162
  200
  243
  290
  339
  388
  437
  485
  530
  571
  606
  638
  662
  681
  695
  701
  702
  698
  689
  698
  729
  760
  792
  824
  857
  890
Total cash flow (excl. dividends), $m
  40
  57
  80
  109
  144
  185
  232
  285
  343
  405
  469
  536
  605
  674
  743
  811
  878
  944
  1,008
  1,070
  1,131
  1,191
  1,250
  1,332
  1,439
  1,550
  1,665
  1,784
  1,908
  2,036
Retained Cash Flow (-), $m
  -38
  -45
  -62
  -84
  -112
  -144
  -180
  -221
  -266
  -314
  -365
  -417
  -470
  -524
  -578
  -630
  -683
  -733
  -783
  -832
  -879
  -926
  -972
  -1,017
  -1,062
  -1,108
  -1,154
  -1,200
  -1,248
  -1,297
Prev. year cash balance distribution, $m
  45
  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
  47
  12
  18
  25
  32
  42
  52
  64
  77
  90
  104
  119
  135
  150
  165
  181
  195
  210
  224
  238
  252
  265
  278
  314
  376
  442
  511
  584
  660
  739
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
  45
  11
  16
  20
  25
  30
  35
  40
  44
  47
  50
  51
  51
  50
  49
  46
  43
  39
  35
  30
  26
  22
  18
  16
  15
  13
  11
  9
  7
  6
Current shareholders' claim on cash, %
  93.0
  88.1
  84.3
  81.3
  78.9
  76.8
  75.1
  73.7
  72.5
  71.5
  70.6
  69.8
  69.2
  68.7
  68.3
  67.9
  67.6
  67.4
  67.2
  67.1
  67.0
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9

CareDx, Inc. is a molecular diagnostics company. The Company is focused on the discovery, development and commercialization of clinically differentiated diagnostic surveillance solutions for transplant patients. The Company's commercialized testing solution, the AlloMap heart transplant molecular test (AlloMap), is a gene expression test that helps clinicians monitor and identify heart transplant recipients with stable graft function having a low probability of moderate/severe acute cellular rejection. Its products under development for transplant monitoring include AlloSure, a development-stage transplant surveillance solution, which applies next generation sequencing to detect and quantitate genetic differences between donor-derived cell-free deoxyribonucleic acid (dd-cfDNA) in the blood stream emanating from the donor heart. It offers the AlloMap Score Variability service, which provides complementary information to help personalize long-term care of heart transplant recipients.

FINANCIAL RATIOS  of  CareDx, Inc. (CDNA)

Valuation Ratios
P/E Ratio -20.1
Price to Sales 19.2
Price to Book 41.4
Price to Tangible Book
Price to Cash Flow -46.2
Price to Free Cash Flow -43.6
Growth Rates
Sales Growth Rate 46.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 5.3%
Total Debt to Equity 126.3%
Interest Coverage -40
Management Effectiveness
Return On Assets -57.2%
Ret/ On Assets - 3 Yr. Avg. -26.5%
Return On Total Capital -88.6%
Ret/ On T. Cap. - 3 Yr. Avg. -37.9%
Return On Equity -162.5%
Return On Equity - 3 Yr. Avg. -64.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 48.8%
Gross Margin - 3 Yr. Avg. 61.1%
EBITDA Margin -90.2%
EBITDA Margin - 3 Yr. Avg. -43.1%
Operating Margin -90.2%
Oper. Margin - 3 Yr. Avg. -43.1%
Pre-Tax Margin -100%
Pre-Tax Margin - 3 Yr. Avg. -51.2%
Net Profit Margin -95.1%
Net Profit Margin - 3 Yr. Avg. -47.1%
Effective Tax Rate 2.4%
Eff/ Tax Rate - 3 Yr. Avg. 67.5%
Payout Ratio 0%

CDNA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CDNA stock intrinsic value calculation we used $77 million for the last fiscal year's total revenue generated by CareDx, Inc.. The default revenue input number comes from 0001 income statement of CareDx, 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 CDNA 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 CDNA is calculated based on our internal credit rating of CareDx, 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 CareDx, 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 CDNA stock the variable cost ratio is equal to 83.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $28 million in the base year in the intrinsic value calculation for CDNA 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 21.7% for CareDx, Inc..

Corporate tax rate of 27% is the nominal tax rate for CareDx, 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 CDNA 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 CDNA are equal to 33.4%.

Life of production assets of 11.5 years is the average useful life of capital assets used in CareDx, 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 CDNA is equal to -4.2%. 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 - $95.928 million for CareDx, 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 41.866 million for CareDx, 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 CareDx, Inc. at the current share price and the inputted number of shares is $1.5 billion.

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