Intrinsic value of Cytosorbents - CTSO

Previous Close

$9.68

  Intrinsic Value

$11.01

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  Rating & Target

hold

+14%

Previous close

$9.68

 
Intrinsic value

$11.01

 
Up/down potential

+14%

 
Rating

hold

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 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 0.3

 

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
  24
  37
  56
  81
  115
  158
  212
  278
  357
  452
  561
  686
  826
  983
  1,156
  1,345
  1,549
  1,768
  2,003
  2,252
  2,515
  2,792
  3,083
  3,387
  3,705
  4,037
  4,382
  4,741
  5,115
  5,503
Variable operating expenses, $m
  18
  27
  41
  60
  84
  116
  155
  204
  262
  331
  411
  502
  606
  721
  847
  986
  1,135
  1,296
  1,468
  1,651
  1,843
  2,047
  2,260
  2,483
  2,716
  2,959
  3,212
  3,475
  3,749
  4,034
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
  32
  42
  56
  75
  100
  132
  171
  221
  279
  348
  429
  520
  625
  740
  866
  1,006
  1,155
  1,317
  1,489
  1,673
  1,865
  2,070
  2,283
  2,507
  2,740
  2,984
  3,237
  3,501
  3,775
  4,061
Operating income, $m
  -8
  -5
  0
  6
  15
  26
  40
  58
  78
  103
  132
  165
  202
  244
  289
  339
  393
  451
  514
  580
  649
  723
  800
  881
  965
  1,053
  1,145
  1,240
  1,339
  1,442
EBITDA, $m
  -8
  -4
  1
  7
  17
  28
  43
  61
  83
  109
  139
  174
  213
  256
  304
  357
  414
  475
  540
  609
  683
  760
  841
  926
  1,014
  1,106
  1,203
  1,303
  1,407
  1,515
Interest expense (income), $m
  0
  1
  2
  2
  4
  5
  7
  10
  14
  18
  23
  29
  36
  44
  53
  63
  74
  87
  100
  114
  129
  145
  162
  180
  199
  218
  239
  260
  282
  305
  330
Earnings before tax, $m
  -9
  -6
  -2
  3
  10
  19
  30
  44
  61
  80
  103
  129
  158
  190
  226
  265
  307
  352
  400
  451
  504
  561
  620
  682
  747
  814
  885
  958
  1,034
  1,113
Tax expense, $m
  0
  0
  0
  1
  3
  5
  8
  12
  16
  22
  28
  35
  43
  51
  61
  71
  83
  95
  108
  122
  136
  151
  167
  184
  202
  220
  239
  259
  279
  300
Net income, $m
  -9
  -6
  -2
  2
  7
  14
  22
  32
  44
  58
  75
  94
  115
  139
  165
  193
  224
  257
  292
  329
  368
  409
  453
  498
  545
  595
  646
  699
  755
  812

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
  17
  27
  40
  58
  81
  112
  150
  197
  253
  320
  397
  486
  586
  697
  819
  953
  1,098
  1,253
  1,419
  1,596
  1,782
  1,979
  2,185
  2,401
  2,626
  2,861
  3,106
  3,360
  3,625
  3,900
Adjusted assets (=assets-cash), $m
  17
  27
  40
  58
  81
  112
  150
  197
  253
  320
  397
  486
  586
  697
  819
  953
  1,098
  1,253
  1,419
  1,596
  1,782
  1,979
  2,185
  2,401
  2,626
  2,861
  3,106
  3,360
  3,625
  3,900
Revenue / Adjusted assets
  1.412
  1.370
  1.400
  1.397
  1.420
  1.411
  1.413
  1.411
  1.411
  1.413
  1.413
  1.412
  1.410
  1.410
  1.411
  1.411
  1.411
  1.411
  1.412
  1.411
  1.411
  1.411
  1.411
  1.411
  1.411
  1.411
  1.411
  1.411
  1.411
  1.411
Average production assets, $m
  2
  2
  4
  5
  8
  10
  14
  18
  24
  30
  37
  45
  55
  65
  76
  89
  102
  117
  132
  149
  166
  184
  203
  224
  245
  266
  289
  313
  338
  363
Working capital, $m
  -1
  -1
  -2
  -2
  -3
  -5
  -6
  -8
  -10
  -13
  -16
  -20
  -24
  -29
  -34
  -39
  -45
  -51
  -58
  -65
  -73
  -81
  -89
  -98
  -107
  -117
  -127
  -138
  -148
  -160
Total debt, $m
  16
  24
  36
  52
  73
  101
  135
  177
  228
  288
  358
  437
  527
  627
  737
  858
  988
  1,128
  1,278
  1,436
  1,604
  1,781
  1,967
  2,161
  2,364
  2,575
  2,795
  3,024
  3,263
  3,510
Total liabilities, $m
  15
  24
  36
  52
  73
  101
  135
  177
  228
  288
  358
  437
  527
  627
  737
  858
  988
  1,128
  1,278
  1,436
  1,604
  1,781
  1,966
  2,161
  2,363
  2,575
  2,795
  3,024
  3,263
  3,510
Total equity, $m
  2
  3
  4
  6
  8
  11
  15
  20
  25
  32
  40
  49
  59
  70
  82
  95
  110
  125
  142
  160
  178
  198
  218
  240
  263
  286
  311
  336
  363
  390
Total liabilities and equity, $m
  17
  27
  40
  58
  81
  112
  150
  197
  253
  320
  398
  486
  586
  697
  819
  953
  1,098
  1,253
  1,420
  1,596
  1,782
  1,979
  2,184
  2,401
  2,626
  2,861
  3,106
  3,360
  3,626
  3,900
Debt-to-equity ratio
  9.090
  9.060
  9.040
  9.030
  9.020
  9.010
  9.010
  9.010
  9.010
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
  9.000
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
  -9
  -6
  -2
  2
  7
  14
  22
  32
  44
  58
  75
  94
  115
  139
  165
  193
  224
  257
  292
  329
  368
  409
  453
  498
  545
  595
  646
  699
  755
  812
Depreciation, amort., depletion, $m
  0
  0
  1
  1
  2
  2
  3
  4
  5
  6
  7
  9
  11
  13
  15
  18
  20
  23
  26
  30
  33
  37
  41
  45
  49
  53
  58
  63
  68
  73
Funds from operations, $m
  -9
  -6
  -2
  3
  9
  16
  25
  36
  49
  64
  82
  103
  126
  152
  180
  211
  244
  280
  318
  359
  401
  446
  493
  543
  594
  648
  704
  762
  822
  885
Change in working capital, $m
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
Cash from operations, $m
  -8
  -5
  -1
  4
  10
  17
  26
  38
  51
  67
  86
  107
  130
  156
  185
  216
  250
  286
  325
  366
  409
  454
  502
  552
  603
  657
  714
  772
  833
  896
Maintenance CAPEX, $m
  0
  0
  0
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -11
  -13
  -15
  -18
  -20
  -23
  -26
  -30
  -33
  -37
  -41
  -45
  -49
  -53
  -58
  -63
  -68
New CAPEX, $m
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
Cash from investing activities, $m
  -1
  -1
  -1
  -3
  -3
  -5
  -6
  -7
  -9
  -11
  -13
  -15
  -18
  -21
  -24
  -27
  -31
  -34
  -38
  -42
  -47
  -51
  -56
  -61
  -66
  -71
  -76
  -82
  -88
  -94
Free cash flow, $m
  -9
  -7
  -3
  1
  6
  13
  21
  30
  42
  56
  72
  91
  112
  135
  161
  189
  219
  251
  286
  323
  362
  403
  446
  491
  538
  587
  638
  691
  746
  803
Issuance/(repayment) of debt, $m
  6
  8
  12
  16
  21
  27
  34
  42
  51
  60
  70
  80
  90
  100
  110
  120
  130
  140
  150
  159
  168
  177
  186
  194
  203
  211
  220
  229
  238
  248
Issuance/(repurchase) of shares, $m
  10
  7
  4
  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  
  16
  15
  16
  16
  21
  27
  34
  42
  51
  60
  70
  80
  90
  100
  110
  120
  130
  140
  150
  159
  168
  177
  186
  194
  203
  211
  220
  229
  238
  248
Total cash flow (excl. dividends), $m
  7
  9
  13
  18
  28
  40
  55
  73
  93
  116
  142
  171
  202
  235
  271
  309
  349
  392
  436
  482
  530
  580
  631
  685
  741
  798
  858
  920
  984
  1,051
Retained Cash Flow (-), $m
  -10
  -7
  -4
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -28
Prev. year cash balance distribution, $m
  9
  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
  6
  2
  9
  16
  25
  37
  51
  68
  87
  110
  134
  162
  192
  224
  259
  296
  335
  376
  419
  464
  511
  560
  611
  663
  718
  775
  833
  894
  958
  1,023
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
  6
  2
  8
  13
  20
  27
  35
  43
  50
  57
  64
  69
  73
  75
  76
  75
  73
  69
  65
  59
  53
  46
  40
  34
  28
  23
  18
  14
  10
  8
Current shareholders' claim on cash, %
  44.7
  31.6
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7
  27.7

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 -20.6
Price to Sales 24.7
Price to Book 0
Price to Tangible Book
Price to Cash Flow -35.2
Price to Free Cash Flow -30.8
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 $15.150754 million for the last fiscal year's total revenue generated by Cytosorbents. The default revenue input number comes from 0001 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 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 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 73.3%.

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 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 CTSO are equal to 6.6%.

Life of production assets of 4.5 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 -2.9%. 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 - $10.262835 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 31.459 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: 3Q Earnings Snapshot   [Nov-06-18 06:25PM  Associated Press]
▶ CTSO: FDA Approves REFRESH-2 Protocol Amendment   [Sep-05-18 09:45AM  Zacks Small Cap Research]
▶ CytoSorbents: 2Q Earnings Snapshot   [Aug-03-18 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]

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