Intrinsic value of Clovis Oncology - CLVS

Previous Close

$47.87

  Intrinsic Value

$1.51

stock screener

  Rating & Target

str. sell

-97%

Previous close

$47.87

 
Intrinsic value

$1.51

 
Up/down potential

-97%

 
Rating

str. sell

We calculate the intrinsic value of CLVS 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 2017), $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 2.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

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
  90
  138
  207
  300
  424
  583
  782
  1,027
  1,321
  1,669
  2,072
  2,534
  3,054
  3,634
  4,273
  4,970
  5,725
  6,537
  7,403
  8,323
  9,296
  10,320
  11,395
  12,520
  13,696
  14,921
  16,197
  17,525
  18,906
  20,341
Variable operating expenses, $m
  456,893
  705,896
  1,055,663
  1,531,710
  2,161,017
  2,970,898
  3,987,811
  5,236,246
  6,737,773
  8,510,353
  10,567,917
  12,920,291
  15,573,295
  18,529,147
  21,786,985
  25,343,496
  29,193,581
  33,331,026
  37,749,122
  42,441,219
  47,401,204
  52,623,890
  58,105,320
  63,842,997
  69,836,038
  76,085,273
  82,593,300
  89,364,493
  96,404,996
  103,722,685
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
  456,893
  705,896
  1,055,663
  1,531,710
  2,161,017
  2,970,898
  3,987,811
  5,236,246
  6,737,773
  8,510,353
  10,567,917
  12,920,291
  15,573,295
  18,529,147
  21,786,985
  25,343,496
  29,193,581
  33,331,026
  37,749,122
  42,441,219
  47,401,204
  52,623,890
  58,105,320
  63,842,997
  69,836,038
  76,085,273
  82,593,300
  89,364,493
  96,404,996
  103,722,685
Operating income, $m
  -456,804
  -705,757
  -1,055,456
  -1,531,410
  -2,160,594
  -2,970,315
  -3,987,029
  -5,235,219
  -6,736,452
  -8,508,684
  -10,565,844
  -12,917,757
  -15,570,241
  -18,525,513
  -21,782,713
  -25,338,525
  -29,187,856
  -33,324,490
  -37,741,719
  -42,432,896
  -47,391,908
  -52,613,569
  -58,093,925
  -63,830,477
  -69,822,343
  -76,070,352
  -82,577,102
  -89,346,967
  -96,386,090
  -103,702,344
EBITDA, $m
  -456,782
  -705,727
  -1,055,415
  -1,531,355
  -2,160,520
  -2,970,217
  -3,986,900
  -5,235,052
  -6,736,239
  -8,508,417
  -10,565,524
  -12,917,366
  -15,569,769
  -18,524,952
  -21,782,053
  -25,337,758
  -29,186,972
  -33,323,481
  -37,740,576
  -42,431,611
  -47,390,473
  -52,611,976
  -58,092,166
  -63,828,544
  -69,820,228
  -76,068,048
  -82,574,601
  -89,344,262
  -96,383,171
  -103,699,203
Interest expense (income), $m
  7
  15
  15
  26
  41
  62
  89
  125
  169
  223
  289
  366
  455
  558
  673
  802
  944
  1,098
  1,266
  1,446
  1,638
  1,842
  2,058
  2,286
  2,524
  2,774
  3,035
  3,307
  3,590
  3,885
  4,191
Earnings before tax, $m
  -456,819
  -705,773
  -1,055,482
  -1,531,451
  -2,160,656
  -2,970,405
  -3,987,154
  -5,235,388
  -6,736,675
  -8,508,972
  -10,566,210
  -12,918,212
  -15,570,799
  -18,526,186
  -21,783,515
  -25,339,469
  -29,188,954
  -33,325,756
  -37,743,165
  -42,434,534
  -47,393,751
  -52,615,628
  -58,096,211
  -63,833,001
  -69,825,116
  -76,073,387
  -82,580,409
  -89,350,557
  -96,389,974
  -103,706,535
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
  -456,819
  -705,773
  -1,055,482
  -1,531,451
  -2,160,656
  -2,970,405
  -3,987,154
  -5,235,388
  -6,736,675
  -8,508,972
  -10,566,210
  -12,918,212
  -15,570,799
  -18,526,186
  -21,783,515
  -25,339,469
  -29,188,954
  -33,325,756
  -37,743,165
  -42,434,534
  -47,393,751
  -52,615,628
  -58,096,211
  -63,833,001
  -69,825,116
  -76,073,387
  -82,580,409
  -89,350,557
  -96,389,974
  -103,706,535

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
  409
  632
  945
  1,372
  1,935
  2,660
  3,571
  4,689
  6,034
  7,621
  9,463
  11,570
  13,946
  16,593
  19,510
  22,695
  26,142
  29,847
  33,804
  38,005
  42,447
  47,124
  52,032
  57,170
  62,537
  68,133
  73,961
  80,024
  86,329
  92,882
Adjusted assets (=assets-cash), $m
  409
  632
  945
  1,372
  1,935
  2,660
  3,571
  4,689
  6,034
  7,621
  9,463
  11,570
  13,946
  16,593
  19,510
  22,695
  26,142
  29,847
  33,804
  38,005
  42,447
  47,124
  52,032
  57,170
  62,537
  68,133
  73,961
  80,024
  86,329
  92,882
Revenue / Adjusted assets
  0.220
  0.218
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
Average production assets, $m
  138
  214
  320
  464
  654
  900
  1,207
  1,586
  2,040
  2,577
  3,200
  3,912
  4,716
  5,611
  6,597
  7,674
  8,840
  10,092
  11,430
  12,851
  14,353
  15,934
  17,594
  19,331
  21,146
  23,038
  25,009
  27,059
  29,191
  31,407
Working capital, $m
  20
  31
  46
  67
  95
  130
  174
  229
  295
  372
  462
  565
  681
  810
  953
  1,108
  1,277
  1,458
  1,651
  1,856
  2,073
  2,301
  2,541
  2,792
  3,054
  3,327
  3,612
  3,908
  4,216
  4,536
Total debt, $m
  283
  484
  766
  1,150
  1,657
  2,310
  3,129
  4,135
  5,345
  6,774
  8,432
  10,328
  12,466
  14,848
  17,474
  20,340
  23,443
  26,778
  30,338
  34,120
  38,117
  42,327
  46,744
  51,368
  56,198
  61,235
  66,480
  71,937
  77,611
  83,509
Total liabilities, $m
  368
  569
  851
  1,234
  1,742
  2,394
  3,214
  4,220
  5,430
  6,859
  8,517
  10,413
  12,551
  14,933
  17,559
  20,425
  23,528
  26,863
  30,423
  34,205
  38,202
  42,411
  46,829
  51,453
  56,283
  61,320
  66,565
  72,022
  77,696
  83,594
Total equity, $m
  41
  63
  95
  137
  194
  266
  357
  469
  603
  762
  946
  1,157
  1,395
  1,659
  1,951
  2,269
  2,614
  2,985
  3,380
  3,801
  4,245
  4,712
  5,203
  5,717
  6,254
  6,813
  7,396
  8,002
  8,633
  9,288
Total liabilities and equity, $m
  409
  632
  946
  1,371
  1,936
  2,660
  3,571
  4,689
  6,033
  7,621
  9,463
  11,570
  13,946
  16,592
  19,510
  22,694
  26,142
  29,848
  33,803
  38,006
  42,447
  47,123
  52,032
  57,170
  62,537
  68,133
  73,961
  80,024
  86,329
  92,882
Debt-to-equity ratio
  6.930
  7.660
  8.100
  8.380
  8.560
  8.680
  8.760
  8.820
  8.860
  8.890
  8.910
  8.930
  8.940
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
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
  -456,819
  -705,773
  -1,055,482
  -1,531,451
  -2,160,656
  -2,970,405
  -3,987,154
  -5,235,388
  -6,736,675
  -8,508,972
  -10,566,210
  -12,918,212
  -15,570,799
  -18,526,186
  -21,783,515
  -25,339,469
  -29,188,954
  -33,325,756
  -37,743,165
  -42,434,534
  -47,393,751
  -52,615,628
  -58,096,211
  -63,833,001
  -69,825,116
  -76,073,387
  -82,580,409
  -89,350,557
  -96,389,974
  -103,706,535
Depreciation, amort., depletion, $m
  22
  30
  40
  55
  74
  98
  129
  167
  213
  266
  320
  391
  472
  561
  660
  767
  884
  1,009
  1,143
  1,285
  1,435
  1,593
  1,759
  1,933
  2,115
  2,304
  2,501
  2,706
  2,919
  3,141
Funds from operations, $m
  -456,797
  -705,743
  -1,055,441
  -1,531,396
  -2,160,582
  -2,970,306
  -3,987,024
  -5,235,221
  -6,736,462
  -8,508,706
  -10,565,890
  -12,917,821
  -15,570,327
  -18,525,625
  -21,782,855
  -25,338,702
  -29,188,070
  -33,324,747
  -37,742,022
  -42,433,249
  -47,392,315
  -52,614,034
  -58,094,451
  -63,831,068
  -69,823,002
  -76,071,083
  -82,577,908
  -89,347,851
  -96,387,055
  -103,703,394
Change in working capital, $m
  7
  11
  15
  21
  28
  35
  44
  55
  66
  78
  90
  103
  116
  129
  142
  156
  168
  181
  193
  205
  217
  228
  240
  251
  262
  273
  285
  296
  308
  320
Cash from operations, $m
  -456,804
  -705,754
  -1,055,457
  -1,531,417
  -2,160,609
  -2,970,342
  -3,987,069
  -5,235,275
  -6,736,528
  -8,508,784
  -10,565,980
  -12,917,924
  -15,570,443
  -18,525,755
  -21,782,997
  -25,338,857
  -29,188,238
  -33,324,928
  -37,742,216
  -42,433,454
  -47,392,532
  -52,614,263
  -58,094,691
  -63,831,319
  -69,823,264
  -76,071,356
  -82,578,193
  -89,348,148
  -96,387,363
  -103,703,714
Maintenance CAPEX, $m
  -9
  -14
  -21
  -32
  -46
  -65
  -90
  -121
  -159
  -204
  -258
  -320
  -391
  -472
  -561
  -660
  -767
  -884
  -1,009
  -1,143
  -1,285
  -1,435
  -1,593
  -1,759
  -1,933
  -2,115
  -2,304
  -2,501
  -2,706
  -2,919
New CAPEX, $m
  -53
  -75
  -106
  -144
  -191
  -245
  -308
  -378
  -455
  -537
  -623
  -712
  -803
  -895
  -986
  -1,077
  -1,166
  -1,253
  -1,338
  -1,421
  -1,502
  -1,581
  -1,660
  -1,737
  -1,815
  -1,892
  -1,971
  -2,050
  -2,132
  -2,216
Cash from investing activities, $m
  -62
  -89
  -127
  -176
  -237
  -310
  -398
  -499
  -614
  -741
  -881
  -1,032
  -1,194
  -1,367
  -1,547
  -1,737
  -1,933
  -2,137
  -2,347
  -2,564
  -2,787
  -3,016
  -3,253
  -3,496
  -3,748
  -4,007
  -4,275
  -4,551
  -4,838
  -5,135
Free cash flow, $m
  -456,865
  -705,843
  -1,055,584
  -1,531,593
  -2,160,846
  -2,970,652
  -3,987,467
  -5,235,774
  -6,737,141
  -8,509,524
  -10,566,861
  -12,918,956
  -15,571,638
  -18,527,121
  -21,784,545
  -25,340,594
  -29,190,172
  -33,327,064
  -37,744,563
  -42,436,018
  -47,395,319
  -52,617,280
  -58,097,944
  -63,834,816
  -69,827,012
  -76,075,363
  -82,582,467
  -89,352,699
  -96,392,201
  -103,708,849
Issuance/(repayment) of debt, $m
  1
  201
  282
  384
  507
  653
  820
  1,006
  1,210
  1,429
  1,658
  1,896
  2,138
  2,382
  2,626
  2,866
  3,103
  3,335
  3,561
  3,782
  3,997
  4,209
  4,418
  4,624
  4,830
  5,036
  5,245
  5,457
  5,674
  5,898
Issuance/(repurchase) of shares, $m
  456,974
  705,795
  1,055,513
  1,531,494
  2,160,712
  2,970,477
  3,987,245
  5,235,499
  6,736,809
  8,509,131
  10,566,394
  12,918,423
  15,571,036
  18,526,451
  21,783,806
  25,339,788
  29,189,299
  33,326,126
  37,743,561
  42,434,954
  47,394,195
  52,616,096
  58,096,702
  63,833,515
  69,825,653
  76,073,947
  82,580,992
  89,351,164
  96,390,605
  103,707,190
Cash from financing (excl. dividends), $m  
  456,975
  705,996
  1,055,795
  1,531,878
  2,161,219
  2,971,130
  3,988,065
  5,236,505
  6,738,019
  8,510,560
  10,568,052
  12,920,319
  15,573,174
  18,528,833
  21,786,432
  25,342,654
  29,192,402
  33,329,461
  37,747,122
  42,438,736
  47,398,192
  52,620,305
  58,101,120
  63,838,139
  69,830,483
  76,078,983
  82,586,237
  89,356,621
  96,396,279
  103,713,088
Total cash flow (excl. dividends), $m
  110
  153
  211
  284
  373
  478
  598
  732
  878
  1,035
  1,192
  1,363
  1,537
  1,712
  1,887
  2,060
  2,230
  2,397
  2,559
  2,718
  2,873
  3,025
  3,175
  3,323
  3,471
  3,620
  3,770
  3,922
  4,078
  4,239
Retained Cash Flow (-), $m
  -456,974
  -705,795
  -1,055,513
  -1,531,494
  -2,160,712
  -2,970,477
  -3,987,245
  -5,235,499
  -6,736,809
  -8,509,131
  -10,566,394
  -12,918,423
  -15,571,036
  -18,526,451
  -21,783,806
  -25,339,788
  -29,189,299
  -33,326,126
  -37,743,561
  -42,434,954
  -47,394,195
  -52,616,096
  -58,096,702
  -63,833,515
  -69,825,653
  -76,073,947
  -82,580,992
  -89,351,164
  -96,390,605
  -103,707,190
Prev. year cash balance distribution, $m
  482
  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
  14
  22
  35
  52
  75
  106
  146
  196
  257
  330
  417
  518
  633
  764
  908
  1,068
  1,243
  1,431
  1,634
  1,851
  2,081
  2,324
  2,580
  2,849
  3,130
  3,424
  3,730
  4,049
  4,381
  4,727
Cash available for distribution, $m
  -456,382
  -705,642
  -1,055,302
  -1,531,210
  -2,160,339
  -2,969,999
  -3,986,647
  -5,234,768
  -6,735,931
  -8,508,096
  -10,565,202
  -12,917,060
  -15,569,499
  -18,524,739
  -21,781,919
  -25,337,727
  -29,187,069
  -33,323,730
  -37,741,002
  -42,432,237
  -47,391,322
  -52,613,070
  -58,093,527
  -63,830,192
  -69,822,182
  -76,070,327
  -82,577,222
  -89,347,242
  -96,386,527
  -103,702,952
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
  -437,567
  -645,992
  -918,396
  -1,260,796
  -1,674,529
  -2,155,449
  -2,693,323
  -3,271,859
  -3,869,437
  -4,460,468
  -5,017,261
  -5,512,170
  -5,919,810
  -6,219,079
  -6,394,804
  -6,438,854
  -6,350,626
  -6,136,891
  -5,811,041
  -5,391,844
  -4,901,830
  -4,365,503
  -3,807,514
  -3,250,997
  -2,716,175
  -2,219,353
  -1,772,343
  -1,382,332
  -1,052,148
  -780,846
Current shareholders' claim on cash, %
  50.0
  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
  0.0
  0.0
  0.0
  0.0

Clovis Oncology, Inc. is a biopharmaceutical company focused on acquiring, developing and commercializing anti-cancer agents in the United States, Europe and other international markets. The Company's product candidates include Rociletinib, Rubraca (Rucaparib) and Lucitanib. Rucaparib is an oral, small molecule poly adenosine diphosphate (ADP)-ribose polymerase (PARP) inhibitor of PARP1, PARP2 and PARP3 approved as a monotherapy for the treatment of patients with deleterious breast cancer (BRCA) (human genes associated with the repair of damaged deoxyribonucleic acid (DNA)) mutation (germline and/or somatic) associated advanced ovarian cancer. Lucitanib is an oral inhibitor of the tyrosine kinase activity of vascular endothelial growth factor receptors (VEGFR) 1-3, platelet-derived growth factor receptors (PDGFR) alpha and beta and fibroblast growth factor receptors (FGFR) 1-3. Rociletinib is an oral mutant-selective inhibitor of epidermal growth factor receptor (EGFR).

FINANCIAL RATIOS  of  Clovis Oncology (CLVS)

Valuation Ratios
P/E Ratio -5.3
Price to Sales 0
Price to Book -463.4
Price to Tangible Book
Price to Cash Flow -6.9
Price to Free Cash Flow -6.9
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.7%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity -7025%
Total Debt to Equity -7025%
Interest Coverage -53
Management Effectiveness
Return On Assets -63.6%
Ret/ On Assets - 3 Yr. Avg. -44.2%
Return On Total Capital -81.4%
Ret/ On T. Cap. - 3 Yr. Avg. -56.5%
Return On Equity -235%
Return On Equity - 3 Yr. Avg. -128.4%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -366.7%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. -376.2%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. -376.2%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -381%
Effective Tax Rate 8.4%
Eff/ Tax Rate - 3 Yr. Avg. 4.9%
Payout Ratio 0%

CLVS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CLVS stock intrinsic value calculation we used $56 million for the last fiscal year's total revenue generated by Clovis Oncology. The default revenue input number comes from 2017 income statement of Clovis Oncology. 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 CLVS 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 CLVS is calculated based on our internal credit rating of Clovis Oncology, 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 Clovis Oncology.
    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 CLVS stock the variable cost ratio is equal to 509931.4%.

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 CLVS 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 Clovis Oncology.

Corporate tax rate of 27% is the nominal tax rate for Clovis Oncology. 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 CLVS stock is equal to 25%.

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 CLVS are equal to 154.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Clovis Oncology 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 CLVS is equal to 22.3%. 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 - $368 million for Clovis Oncology - 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 47 million for Clovis Oncology 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 Clovis Oncology at the current share price and the inputted number of shares is $2.2 billion.

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COMPANY NEWS

▶ Why A Tie-Up With Clovis Helped This Biotech Spike To An 18-Year High   [Jun-04-18 04:32PM  Investor's Business Daily]
▶ Clovis: 1Q Earnings Snapshot   [May-08-18 05:27PM  Associated Press]
▶ Clovis Oncology ovarian cancer drug receives fast-tracked FDA approval   [Apr-06-18 04:57PM  American City Business Journals]
▶ Clovis Pops After Cancer Drug Gets OK; Smaller Players Crash   [04:12PM  Investor's Business Daily]
▶ Tesaro Wants a Stronger Grip in Ovarian Cancer   [Mar-27-18 08:31PM  Motley Fool]
▶ AstraZeneca Goes Up Against 2 Cancer Upstarts   [Mar-09-18 07:44PM  Motley Fool]
▶ These Biotechs Diverge After Biggest Moneymakers Lag Expectations   [Feb-27-18 04:27PM  Investor's Business Daily]
▶ Clovis reports 4Q loss   [Feb-26-18 05:25PM  Associated Press]
▶ Why These 3 Biotech Stocks Could Outperform Their Peers In 2018   [Jan-05-18 04:39PM  Investor's Business Daily]
▶ Clovis Oncology Shows Rising Relative Strength; Still Shy Of Key Threshold   [Dec-15-17 03:00AM  Investor's Business Daily]
▶ Value Biotech ETFs to Buy Now   [Dec-13-17 12:41PM  Zacks]
▶ Clovis Oncology gets FDA fast-tracked review date for ovarian cancer drug   [Dec-05-17 08:25PM  American City Business Journals]
▶ Clovis reports 3Q loss   [Nov-01-17 06:26PM  Associated Press]
▶ Neurocrine, Exelixis, Juno Stocks Rocket After Crushing Views   [05:47PM  Investor's Business Daily]
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