Intrinsic value of Cytosorbents - CTSO

Previous Close

$11.40

  Intrinsic Value

$22.75

stock screener

  Rating & Target

str. buy

+100%

Previous close

$11.40

 
Intrinsic value

$22.75

 
Up/down potential

+100%

 
Rating

str. buy

We calculate the intrinsic value of CTSO 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 0.3

 

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, %
  59.00
  53.60
  48.74
  44.37
  40.43
  36.89
  33.70
  30.83
  28.25
  25.92
  23.83
  21.95
  20.25
  18.73
  17.35
  16.12
  15.01
  14.01
  13.11
  12.29
  11.57
  10.91
  10.32
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.54
Revenue, $m
  24
  37
  54
  79
  110
  151
  202
  264
  339
  427
  529
  645
  776
  921
  1,081
  1,255
  1,443
  1,645
  1,861
  2,090
  2,331
  2,586
  2,852
  3,131
  3,423
  3,727
  4,043
  4,372
  4,714
  5,070
Variable operating expenses, $m
  17
  27
  40
  57
  80
  110
  147
  192
  246
  310
  384
  468
  563
  669
  785
  911
  1,048
  1,194
  1,351
  1,517
  1,692
  1,877
  2,071
  2,273
  2,485
  2,706
  2,935
  3,174
  3,423
  3,681
Fixed operating expenses, $m
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
Total operating expenses, $m
  31
  42
  55
  72
  96
  126
  163
  209
  263
  327
  402
  486
  582
  688
  804
  931
  1,068
  1,215
  1,372
  1,539
  1,714
  1,900
  2,094
  2,297
  2,509
  2,731
  2,960
  3,200
  3,449
  3,708
Operating income, $m
  -8
  -5
  0
  6
  15
  25
  39
  56
  76
  100
  127
  159
  194
  233
  277
  324
  375
  430
  489
  551
  617
  686
  758
  834
  914
  996
  1,083
  1,172
  1,265
  1,362
EBITDA, $m
  -8
  -4
  0
  7
  15
  26
  40
  58
  78
  102
  131
  163
  199
  239
  284
  332
  385
  441
  501
  564
  632
  703
  777
  855
  936
  1,021
  1,109
  1,201
  1,296
  1,395
Interest expense (income), $m
  0
  1
  1
  2
  3
  5
  7
  10
  13
  17
  22
  28
  34
  42
  50
  60
  70
  82
  94
  108
  122
  137
  153
  169
  187
  205
  224
  244
  265
  286
  309
Earnings before tax, $m
  -8
  -6
  -2
  3
  10
  19
  30
  43
  59
  78
  100
  124
  152
  183
  217
  253
  293
  336
  381
  429
  480
  533
  589
  648
  709
  772
  839
  907
  979
  1,053
Tax expense, $m
  0
  0
  0
  1
  3
  5
  8
  12
  16
  21
  27
  34
  41
  49
  59
  68
  79
  91
  103
  116
  130
  144
  159
  175
  191
  209
  226
  245
  264
  284
Net income, $m
  -8
  -6
  -2
  2
  7
  14
  22
  31
  43
  57
  73
  91
  111
  133
  158
  185
  214
  245
  278
  313
  350
  389
  430
  473
  517
  564
  612
  662
  715
  769

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
  23
  35
  53
  76
  107
  146
  195
  255
  327
  412
  511
  623
  749
  889
  1,043
  1,211
  1,393
  1,588
  1,796
  2,017
  2,250
  2,496
  2,753
  3,023
  3,304
  3,597
  3,903
  4,220
  4,551
  4,894
Adjusted assets (=assets-cash), $m
  23
  35
  53
  76
  107
  146
  195
  255
  327
  412
  511
  623
  749
  889
  1,043
  1,211
  1,393
  1,588
  1,796
  2,017
  2,250
  2,496
  2,753
  3,023
  3,304
  3,597
  3,903
  4,220
  4,551
  4,894
Revenue / Adjusted assets
  1.043
  1.057
  1.019
  1.039
  1.028
  1.034
  1.036
  1.035
  1.037
  1.036
  1.035
  1.035
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
Average production assets, $m
  2
  2
  4
  5
  7
  10
  13
  17
  22
  28
  34
  42
  50
  60
  70
  82
  94
  107
  121
  136
  152
  168
  185
  204
  222
  242
  263
  284
  306
  330
Working capital, $m
  -1
  -1
  -2
  -2
  -3
  -5
  -6
  -8
  -10
  -13
  -16
  -19
  -23
  -28
  -32
  -38
  -43
  -49
  -56
  -63
  -70
  -78
  -86
  -94
  -103
  -112
  -121
  -131
  -141
  -152
Total debt, $m
  11
  20
  31
  47
  68
  94
  127
  168
  216
  273
  339
  415
  500
  594
  698
  811
  933
  1,065
  1,205
  1,353
  1,510
  1,676
  1,849
  2,030
  2,219
  2,417
  2,622
  2,836
  3,058
  3,289
Total liabilities, $m
  15
  24
  35
  51
  72
  98
  131
  172
  220
  277
  344
  419
  504
  598
  702
  815
  937
  1,069
  1,209
  1,357
  1,514
  1,680
  1,853
  2,034
  2,224
  2,421
  2,626
  2,840
  3,063
  3,294
Total equity, $m
  8
  12
  17
  25
  35
  48
  64
  83
  107
  135
  167
  204
  245
  291
  341
  396
  455
  519
  587
  660
  736
  816
  900
  988
  1,080
  1,176
  1,276
  1,380
  1,488
  1,600
Total liabilities and equity, $m
  23
  36
  52
  76
  107
  146
  195
  255
  327
  412
  511
  623
  749
  889
  1,043
  1,211
  1,392
  1,588
  1,796
  2,017
  2,250
  2,496
  2,753
  3,022
  3,304
  3,597
  3,902
  4,220
  4,551
  4,894
Debt-to-equity ratio
  1.510
  1.700
  1.820
  1.890
  1.940
  1.970
  1.990
  2.010
  2.020
  2.030
  2.030
  2.040
  2.040
  2.040
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.060
  2.060
  2.060
Adjusted equity ratio
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -8
  -6
  -2
  2
  7
  14
  22
  31
  43
  57
  73
  91
  111
  133
  158
  185
  214
  245
  278
  313
  350
  389
  430
  473
  517
  564
  612
  662
  715
  769
Depreciation, amort., depletion, $m
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  31
  33
Funds from operations, $m
  -8
  -5
  -2
  3
  8
  15
  23
  33
  45
  60
  76
  95
  116
  139
  165
  193
  223
  256
  290
  327
  366
  406
  449
  493
  540
  588
  638
  691
  745
  802
Change in working capital, $m
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
Cash from operations, $m
  -8
  -5
  -1
  4
  9
  16
  24
  35
  47
  62
  79
  98
  120
  144
  170
  198
  229
  262
  297
  334
  373
  414
  457
  502
  548
  597
  648
  701
  756
  813
Maintenance CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -14
  -15
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
New CAPEX, $m
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
Cash from investing activities, $m
  -1
  -1
  -1
  -2
  -3
  -4
  -4
  -5
  -7
  -8
  -10
  -11
  -12
  -14
  -16
  -18
  -20
  -22
  -25
  -27
  -30
  -32
  -34
  -37
  -39
  -42
  -45
  -47
  -50
  -54
Free cash flow, $m
  -9
  -6
  -3
  2
  6
  12
  20
  30
  41
  54
  70
  87
  107
  129
  154
  180
  209
  239
  272
  307
  343
  382
  423
  465
  509
  555
  603
  653
  705
  759
Issuance/(repayment) of debt, $m
  5
  8
  12
  16
  21
  26
  33
  40
  49
  57
  66
  75
  85
  94
  104
  113
  122
  131
  140
  149
  157
  165
  173
  181
  189
  197
  206
  214
  222
  231
Issuance/(repurchase) of shares, $m
  11
  10
  8
  5
  3
  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  
  16
  18
  20
  21
  24
  26
  33
  40
  49
  57
  66
  75
  85
  94
  104
  113
  122
  131
  140
  149
  157
  165
  173
  181
  189
  197
  206
  214
  222
  231
Total cash flow (excl. dividends), $m
  9
  12
  17
  23
  30
  39
  53
  70
  89
  111
  136
  163
  192
  224
  257
  293
  331
  371
  412
  455
  500
  547
  596
  646
  698
  753
  809
  867
  927
  990
Retained Cash Flow (-), $m
  -11
  -10
  -8
  -8
  -10
  -13
  -16
  -20
  -24
  -28
  -32
  -37
  -41
  -46
  -50
  -55
  -59
  -64
  -68
  -72
  -76
  -80
  -84
  -88
  -92
  -96
  -100
  -104
  -108
  -112
Prev. year cash balance distribution, $m
  5
  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
  3
  5
  8
  12
  17
  24
  33
  44
  58
  74
  94
  116
  141
  170
  202
  237
  275
  316
  360
  408
  458
  511
  566
  625
  686
  750
  816
  885
  958
  1,032
Cash available for distribution, $m
  2
  2
  9
  15
  20
  26
  37
  50
  66
  84
  104
  126
  151
  178
  207
  238
  272
  307
  344
  383
  424
  467
  512
  558
  606
  657
  709
  763
  819
  878
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
  2
  8
  12
  15
  19
  25
  32
  38
  44
  49
  54
  57
  60
  61
  61
  59
  57
  53
  49
  44
  39
  34
  28
  24
  19
  15
  12
  9
  7
Current shareholders' claim on cash, %
  79.9
  70.7
  66.3
  64.3
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6
  63.6

CytoSorbents Corporation is a critical care focused immunotherapy company. The Company is engaged in commercializing its product, CytoSorb, which is a blood purification technology with focus in preventing or treating multiple organ failure. The Company's purification technologies are based on biocompatible, porous polymer beads that remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. The Company's CytoSorb is an extracorporeal cytokine filter and is designed to reduce the cytokine storm that causes inflammation, organ failure and death in common critical illnesses, such as sepsis, burn injury, trauma, lung injury and pancreatitis. In addition, CytoSorb is used in other inflammatory conditions, such as cardiac surgery and autoimmune disease flares and cancer cachexia. It also has other products under development based upon its blood purification technology, including HemoDefend, ContrastSorb, DrugSorb, BetaSorb and others.

FINANCIAL RATIOS  of  Cytosorbents (CTSO)

Valuation Ratios
P/E Ratio -24.2
Price to Sales 29
Price to Book 0
Price to Tangible Book
Price to Cash Flow -41.5
Price to Free Cash Flow -36.3
Growth Rates
Sales Growth Rate 100%
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 5
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -114.3%
Ret/ On Assets - 3 Yr. Avg. -116.2%
Return On Total Capital -184.6%
Ret/ On T. Cap. - 3 Yr. Avg. -191.7%
Return On Equity -300%
Return On Equity - 3 Yr. Avg. -264.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 60%
Gross Margin - 3 Yr. Avg. 56.7%
EBITDA Margin -120%
EBITDA Margin - 3 Yr. Avg. -176.7%
Operating Margin -110%
Oper. Margin - 3 Yr. Avg. -155%
Pre-Tax Margin -120%
Pre-Tax Margin - 3 Yr. Avg. -176.7%
Net Profit Margin -120%
Net Profit Margin - 3 Yr. Avg. -168.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 3.3%
Payout Ratio 0%

CTSO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CTSO stock intrinsic value calculation we used $15 million for the last fiscal year's total revenue generated by Cytosorbents. The default revenue input number comes from 2017 income statement of Cytosorbents. 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 CTSO stock valuation model: a) initial revenue growth rate of 59% 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 CTSO is calculated based on our internal credit rating of Cytosorbents, 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 Cytosorbents.
    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 CTSO stock the variable cost ratio is equal to 72.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $14 million in the base year in the intrinsic value calculation for CTSO 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 10.1% for Cytosorbents.

Corporate tax rate of 27% is the nominal tax rate for Cytosorbents. 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 CTSO stock is equal to 21.9%.

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 CTSO are equal to 6.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Cytosorbents 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 CTSO is equal to -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 - $10 million for Cytosorbents - 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 28 million for Cytosorbents 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 Cytosorbents at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ CytoSorbents: 2Q Earnings Snapshot   [05:09AM  Associated Press]
▶ CytoSorbents: 1Q Earnings Snapshot   [May-08-18 06:27PM  Associated Press]
▶ CytoSorbents' CEO on flu epidemic   [Feb-13-18 05:10PM  Yahoo Finance Video]
▶ CTSO: Q4 Preannouncement, Our Initial Thoughts on REFRESH II   [Jan-12-18 11:45AM  Zacks Small Cap Research]
▶ CTSO: Germany Reimbursement Rebounds, Drives Strong Record Product   [Nov-21-17 11:00AM  Zacks Small Cap Research]
▶ CytoSorbents reports 3Q loss   [Nov-09-17 06:25PM  Associated Press]
▶ CytoSorbents to Present at the 2017 BIO Investor Forum   [Oct-10-17 07:15AM  PR Newswire]
▶ CTSO: Product Revenue Sets New Record, Further Growth Expected in 2H   [Aug-14-17 10:00AM  Zacks Small Cap Research]
▶ ETFs with exposure to CytoSorbents Corp. : May 22, 2017   [May-22-17 01:32PM  Capital Cube]
▶ CTSO: Revenue Acceleration Expected 2H. REFRESH Efficacy Compelling   [May-15-17 04:00PM  Zacks Small Cap Research]
▶ ETFs with exposure to CytoSorbents Corp. : May 9, 2017   [May-09-17 04:30PM  Capital Cube]
▶ CytoSorbents reports 1Q loss   [May-08-17 05:23PM  Associated Press]
▶ CytoSorbents Announces Positive REFRESH I Trial Results   [May-05-17 09:00AM  PR Newswire]
▶ CTSO: Equity Raise, Cancer Applications, REFRESH I Data Upcoming   [Apr-17-17 09:00AM  Zacks Small Cap Research]
▶ ETFs with exposure to CytoSorbents Corp. : April 5, 2017   [Apr-05-17 04:35PM  Capital Cube]
▶ CytoSorbents Announces Pricing of Follow-On Offering   [Mar-31-17 08:00AM  PR Newswire]
▶ CytoSorbents Announces Proposed Offering of Common Stock   [Mar-30-17 04:01PM  PR Newswire]
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