Intrinsic value of Celgene - CELG

Previous Close

$69.98

  Intrinsic Value

$165.85

stock screener

  Rating & Target

str. buy

+137%

Previous close

$69.98

 
Intrinsic value

$165.85

 
Up/down potential

+137%

 
Rating

str. buy

We calculate the intrinsic value of CELG 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 50.7

 

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, %
  16.60
  15.44
  14.40
  13.46
  12.61
  11.85
  11.16
  10.55
  9.99
  9.49
  9.04
  8.64
  8.28
  7.95
  7.65
  7.39
  7.15
  6.93
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.67
  5.61
  5.55
Revenue, $m
  15,161
  17,502
  20,022
  22,716
  25,581
  28,612
  31,807
  35,162
  38,676
  42,348
  46,178
  50,168
  54,320
  58,637
  63,125
  67,789
  72,636
  77,673
  82,909
  88,353
  94,017
  99,911
  106,048
  112,441
  119,103
  126,050
  133,297
  140,861
  148,760
  157,010
Variable operating expenses, $m
  1,962
  2,060
  2,165
  2,277
  2,397
  2,523
  2,657
  2,796
  2,943
  3,096
  1,926
  2,092
  2,265
  2,445
  2,632
  2,827
  3,029
  3,239
  3,457
  3,684
  3,921
  4,166
  4,422
  4,689
  4,967
  5,256
  5,559
  5,874
  6,203
  6,547
Fixed operating expenses, $m
  6,737
  6,885
  7,037
  7,192
  7,350
  7,511
  7,677
  7,846
  8,018
  8,195
  8,375
  8,559
  8,747
  8,940
  9,137
  9,338
  9,543
  9,753
  9,967
  10,187
  10,411
  10,640
  10,874
  11,113
  11,358
  11,608
  11,863
  12,124
  12,391
  12,663
Total operating expenses, $m
  8,699
  8,945
  9,202
  9,469
  9,747
  10,034
  10,334
  10,642
  10,961
  11,291
  10,301
  10,651
  11,012
  11,385
  11,769
  12,165
  12,572
  12,992
  13,424
  13,871
  14,332
  14,806
  15,296
  15,802
  16,325
  16,864
  17,422
  17,998
  18,594
  19,210
Operating income, $m
  6,462
  8,557
  10,820
  13,247
  15,834
  18,578
  21,474
  24,520
  27,715
  31,057
  35,877
  39,517
  43,307
  47,252
  51,356
  55,625
  60,064
  64,681
  69,484
  74,482
  79,686
  85,105
  90,752
  96,639
  102,779
  109,186
  115,876
  122,863
  130,166
  137,800
EBITDA, $m
  8,109
  10,253
  12,568
  15,052
  17,698
  20,505
  23,467
  26,584
  29,852
  33,271
  36,841
  40,563
  44,441
  48,476
  52,674
  57,039
  61,579
  66,302
  71,214
  76,326
  81,647
  87,190
  92,965
  98,985
  105,264
  111,816
  118,657
  125,803
  133,270
  141,076
Interest expense (income), $m
  527
  855
  796
  980
  1,178
  1,391
  1,616
  1,855
  2,107
  2,371
  2,648
  2,937
  3,239
  3,553
  3,880
  4,220
  4,574
  4,941
  5,323
  5,720
  6,132
  6,561
  7,007
  7,471
  7,955
  8,458
  8,983
  9,530
  10,101
  10,697
  11,319
Earnings before tax, $m
  5,607
  7,762
  9,840
  12,069
  14,444
  16,961
  19,618
  22,413
  25,344
  28,409
  32,940
  36,278
  39,754
  43,372
  47,136
  51,051
  55,123
  59,358
  63,764
  68,350
  73,125
  78,098
  83,281
  88,684
  94,321
  100,203
  106,346
  112,762
  119,469
  126,481
Tax expense, $m
  1,514
  2,096
  2,657
  3,259
  3,900
  4,580
  5,297
  6,052
  6,843
  7,670
  8,894
  9,795
  10,734
  11,710
  12,727
  13,784
  14,883
  16,027
  17,216
  18,455
  19,744
  21,086
  22,486
  23,945
  25,467
  27,055
  28,713
  30,446
  32,257
  34,150
Net income, $m
  4,093
  5,666
  7,183
  8,810
  10,544
  12,382
  14,321
  16,362
  18,501
  20,739
  24,046
  26,483
  29,020
  31,662
  34,409
  37,267
  40,240
  43,331
  46,548
  49,896
  53,381
  57,012
  60,795
  64,739
  68,854
  73,148
  77,632
  82,317
  87,212
  92,331

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
  24,573
  28,367
  32,451
  36,817
  41,460
  46,373
  51,551
  56,988
  62,684
  68,635
  74,843
  81,309
  88,038
  95,036
  102,310
  109,869
  117,724
  125,888
  134,374
  143,198
  152,378
  161,931
  171,877
  182,238
  193,036
  204,295
  216,041
  228,300
  241,101
  254,474
Adjusted assets (=assets-cash), $m
  24,573
  28,367
  32,451
  36,817
  41,460
  46,373
  51,551
  56,988
  62,684
  68,635
  74,843
  81,309
  88,038
  95,036
  102,310
  109,869
  117,724
  125,888
  134,374
  143,198
  152,378
  161,931
  171,877
  182,238
  193,036
  204,295
  216,041
  228,300
  241,101
  254,474
Revenue / Adjusted assets
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
Average production assets, $m
  9,491
  10,957
  12,534
  14,220
  16,014
  17,911
  19,911
  22,011
  24,211
  26,510
  28,907
  31,405
  34,004
  36,707
  39,516
  42,436
  45,470
  48,623
  51,901
  55,309
  58,855
  62,544
  66,386
  70,388
  74,559
  78,907
  83,444
  88,179
  93,123
  98,288
Working capital, $m
  -167
  -193
  -220
  -250
  -281
  -315
  -350
  -387
  -425
  -466
  -508
  -552
  -598
  -645
  -694
  -746
  -799
  -854
  -912
  -972
  -1,034
  -1,099
  -1,167
  -1,237
  -1,310
  -1,387
  -1,466
  -1,549
  -1,636
  -1,727
Total debt, $m
  14,734
  18,148
  21,824
  25,754
  29,932
  34,354
  39,014
  43,908
  49,033
  54,389
  59,976
  65,796
  71,853
  78,151
  84,697
  91,500
  98,570
  105,917
  113,554
  121,496
  129,758
  138,355
  147,307
  156,632
  166,350
  176,484
  187,055
  198,088
  209,609
  221,644
Total liabilities, $m
  22,116
  25,530
  29,206
  33,136
  37,314
  41,736
  46,396
  51,290
  56,415
  61,771
  67,358
  73,178
  79,235
  85,533
  92,079
  98,882
  105,952
  113,299
  120,936
  128,878
  137,140
  145,737
  154,689
  164,014
  173,732
  183,866
  194,437
  205,470
  216,991
  229,026
Total equity, $m
  2,457
  2,837
  3,245
  3,682
  4,146
  4,637
  5,155
  5,699
  6,268
  6,863
  7,484
  8,131
  8,804
  9,504
  10,231
  10,987
  11,772
  12,589
  13,437
  14,320
  15,238
  16,193
  17,188
  18,224
  19,304
  20,430
  21,604
  22,830
  24,110
  25,447
Total liabilities and equity, $m
  24,573
  28,367
  32,451
  36,818
  41,460
  46,373
  51,551
  56,989
  62,683
  68,634
  74,842
  81,309
  88,039
  95,037
  102,310
  109,869
  117,724
  125,888
  134,373
  143,198
  152,378
  161,930
  171,877
  182,238
  193,036
  204,296
  216,041
  228,300
  241,101
  254,473
Debt-to-equity ratio
  6.000
  6.400
  6.730
  6.990
  7.220
  7.410
  7.570
  7.700
  7.820
  7.920
  8.010
  8.090
  8.160
  8.220
  8.280
  8.330
  8.370
  8.410
  8.450
  8.480
  8.520
  8.540
  8.570
  8.590
  8.620
  8.640
  8.660
  8.680
  8.690
  8.710
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
  4,093
  5,666
  7,183
  8,810
  10,544
  12,382
  14,321
  16,362
  18,501
  20,739
  24,046
  26,483
  29,020
  31,662
  34,409
  37,267
  40,240
  43,331
  46,548
  49,896
  53,381
  57,012
  60,795
  64,739
  68,854
  73,148
  77,632
  82,317
  87,212
  92,331
Depreciation, amort., depletion, $m
  1,647
  1,695
  1,748
  1,804
  1,864
  1,927
  1,994
  2,064
  2,137
  2,214
  964
  1,047
  1,133
  1,224
  1,317
  1,415
  1,516
  1,621
  1,730
  1,844
  1,962
  2,085
  2,213
  2,346
  2,485
  2,630
  2,781
  2,939
  3,104
  3,276
Funds from operations, $m
  5,740
  7,361
  8,931
  10,614
  12,408
  14,309
  16,315
  18,425
  20,638
  22,953
  25,010
  27,530
  30,154
  32,885
  35,727
  38,682
  41,755
  44,952
  48,278
  51,739
  55,343
  59,096
  63,008
  67,086
  71,339
  75,779
  80,414
  85,256
  90,316
  95,607
Change in working capital, $m
  -24
  -26
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -62
  -65
  -68
  -70
  -73
  -76
  -80
  -83
  -87
  -91
Cash from operations, $m
  5,763
  7,387
  8,959
  10,644
  12,439
  14,342
  16,351
  18,462
  20,677
  22,993
  25,052
  27,574
  30,200
  32,933
  35,776
  38,733
  41,809
  45,008
  48,336
  51,799
  55,405
  59,161
  63,075
  67,156
  71,413
  75,855
  80,494
  85,339
  90,403
  95,698
Maintenance CAPEX, $m
  -271
  -316
  -365
  -418
  -474
  -534
  -597
  -664
  -734
  -807
  -884
  -964
  -1,047
  -1,133
  -1,224
  -1,317
  -1,415
  -1,516
  -1,621
  -1,730
  -1,844
  -1,962
  -2,085
  -2,213
  -2,346
  -2,485
  -2,630
  -2,781
  -2,939
  -3,104
New CAPEX, $m
  -1,351
  -1,465
  -1,577
  -1,687
  -1,793
  -1,898
  -2,000
  -2,100
  -2,200
  -2,299
  -2,398
  -2,498
  -2,599
  -2,703
  -2,809
  -2,920
  -3,034
  -3,153
  -3,278
  -3,408
  -3,545
  -3,690
  -3,842
  -4,002
  -4,171
  -4,349
  -4,537
  -4,735
  -4,944
  -5,165
Cash from investing activities, $m
  -1,622
  -1,781
  -1,942
  -2,105
  -2,267
  -2,432
  -2,597
  -2,764
  -2,934
  -3,106
  -3,282
  -3,462
  -3,646
  -3,836
  -4,033
  -4,237
  -4,449
  -4,669
  -4,899
  -5,138
  -5,389
  -5,652
  -5,927
  -6,215
  -6,517
  -6,834
  -7,167
  -7,516
  -7,883
  -8,269
Free cash flow, $m
  4,141
  5,605
  7,017
  8,540
  10,172
  11,911
  13,754
  15,698
  17,743
  19,887
  21,771
  24,112
  26,554
  29,096
  31,743
  34,496
  37,360
  40,339
  43,437
  46,661
  50,016
  53,510
  57,149
  60,941
  64,896
  69,021
  73,327
  77,823
  82,520
  87,429
Issuance/(repayment) of debt, $m
  -1,104
  3,415
  3,675
  3,930
  4,179
  4,422
  4,660
  4,894
  5,126
  5,356
  5,587
  5,820
  6,056
  6,298
  6,546
  6,803
  7,070
  7,347
  7,638
  7,942
  8,261
  8,598
  8,952
  9,325
  9,718
  10,133
  10,571
  11,033
  11,521
  12,035
Issuance/(repurchase) of shares, $m
  498
  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  
  -606
  3,415
  3,675
  3,930
  4,179
  4,422
  4,660
  4,894
  5,126
  5,356
  5,587
  5,820
  6,056
  6,298
  6,546
  6,803
  7,070
  7,347
  7,638
  7,942
  8,261
  8,598
  8,952
  9,325
  9,718
  10,133
  10,571
  11,033
  11,521
  12,035
Total cash flow (excl. dividends), $m
  3,535
  9,020
  10,692
  12,470
  14,351
  16,333
  18,413
  20,592
  22,869
  25,243
  27,358
  29,932
  32,610
  35,394
  38,289
  41,299
  44,430
  47,686
  51,075
  54,603
  58,278
  62,107
  66,100
  70,266
  74,614
  79,154
  83,898
  88,856
  94,041
  99,464
Retained Cash Flow (-), $m
  -4,591
  -379
  -408
  -437
  -464
  -491
  -518
  -544
  -570
  -595
  -621
  -647
  -673
  -700
  -727
  -756
  -786
  -816
  -849
  -882
  -918
  -955
  -995
  -1,036
  -1,080
  -1,126
  -1,175
  -1,226
  -1,280
  -1,337
Prev. year cash balance distribution, $m
  9,055
  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
  7,999
  8,641
  10,284
  12,033
  13,886
  15,841
  17,896
  20,049
  22,299
  24,648
  26,737
  29,286
  31,937
  34,695
  37,562
  40,544
  43,644
  46,870
  50,226
  53,720
  57,360
  61,152
  65,106
  69,230
  73,534
  78,028
  82,723
  87,630
  92,760
  98,127
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
  7,669
  7,910
  8,949
  9,908
  10,764
  11,497
  12,090
  12,531
  12,810
  12,922
  12,697
  12,497
  12,143
  11,648
  11,028
  10,303
  9,496
  8,632
  7,733
  6,826
  5,933
  5,074
  4,267
  3,526
  2,861
  2,276
  1,775
  1,356
  1,013
  739
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Celgene Corporation is an integrated global biopharmaceutical company. The Company, together with its subsidiaries, is engaged in the discovery, development and commercialization of therapies for the treatment of cancer and inflammatory diseases through solutions in protein homeostasis, immuno-oncology, epigenetics, immunology and neuro-inflammation. Its commercial-stage products include REVLIMID (lenalidomide), POMALYST/IMNOVID (pomalidomide), OTEZLA (apremilast), ABRAXANE (paclitaxel albumin-bound particles for injectable suspension), VIDAZA, azacitidine for injection (generic version of VIDAZA) and THALOMID (thalidomide). Its clinical trial activity includes trials across the disease areas of hematology, solid tumors, and inflammation and immunology. The Company also markets ISTODAX, which is an epigenetic modifier. The Company is also evaluating AG-221 (enasidenib) in combination with VIDAZA in newly diagnosed acute myeloid leukemia with isocitrate dehydrogenase-2 mutations.

FINANCIAL RATIOS  of  Celgene (CELG)

Valuation Ratios
P/E Ratio 27.3
Price to Sales 4.9
Price to Book 8.3
Price to Tangible Book
Price to Cash Flow 13.7
Price to Free Cash Flow 14.6
Growth Rates
Sales Growth Rate 21.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.5%
Cap. Spend. - 3 Yr. Gr. Rate 11.2%
Financial Strength
Quick Ratio 16
Current Ratio 0.2
LT Debt to Equity 208.9%
Total Debt to Equity 216.5%
Interest Coverage 6
Management Effectiveness
Return On Assets 8.9%
Ret/ On Assets - 3 Yr. Avg. 10.4%
Return On Total Capital 9.8%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 31.9%
Return On Equity - 3 Yr. Avg. 30.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 96.1%
Gross Margin - 3 Yr. Avg. 95.5%
EBITDA Margin 30.3%
EBITDA Margin - 3 Yr. Avg. 32.3%
Operating Margin 25%
Oper. Margin - 3 Yr. Avg. 27.2%
Pre-Tax Margin 21.1%
Pre-Tax Margin - 3 Yr. Avg. 24.4%
Net Profit Margin 17.8%
Net Profit Margin - 3 Yr. Avg. 20.4%
Effective Tax Rate 15.8%
Eff/ Tax Rate - 3 Yr. Avg. 16.9%
Payout Ratio 0%

CELG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CELG stock intrinsic value calculation we used $13003 million for the last fiscal year's total revenue generated by Celgene. The default revenue input number comes from 0001 income statement of Celgene. 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 CELG stock valuation model: a) initial revenue growth rate of 16.6% 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 CELG is calculated based on our internal credit rating of Celgene, 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 Celgene.
    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 CELG stock the variable cost ratio is equal to 14.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6592 million in the base year in the intrinsic value calculation for CELG 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 Celgene.

Corporate tax rate of 27% is the nominal tax rate for Celgene. 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 CELG 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 CELG are equal to 62.6%.

Life of production assets of 32.4 years is the average useful life of capital assets used in Celgene 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 CELG is equal to -1.1%. 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 - $6921 million for Celgene - 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 724.827 million for Celgene 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 Celgene at the current share price and the inputted number of shares is $50.7 billion.

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COMPANY NEWS

▶ 3 Top Healthcare Stocks to Buy Right Now   [Nov-19-18 08:46PM  Motley Fool]
▶ Better Buy: Celgene Corporation vs. Merck & Co.   [Nov-17-18 05:02PM  Motley Fool]
▶ [$$] Dragonfly Therapeutics Gets $50 Million Through Celgene Alliance   [Nov-14-18 04:13PM  The Wall Street Journal]
▶ 10 Deeply Discounted Stocks to Buy   [03:56PM  Kiplinger]
▶ Why Celgene's Stock Nosedived in October   [Nov-12-18 08:22AM  Motley Fool]
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▶ Celgene Offers Beat-And-Raise With Only One Quarterly 'Hiccup'   [Oct-25-18 04:23PM  Investor's Business Daily]
▶ Celgene Earnings, Revenue beat in Q3   [10:40AM  Investing.com]
▶ Celgene: 3Q Earnings Snapshot   [07:56AM  Associated Press]
▶ Q3 Earnings Outlook For Celgene   [02:46PM  Benzinga]
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