Intrinsic value of Enanta Pharmaceuticals, Inc. - ENTA

Previous Close

$102.57

  Intrinsic Value

$1,383

stock screener

  Rating & Target

str. buy

+999%

Previous close

$102.57

 
Intrinsic value

$1,383

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of ENTA 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 2.0

 

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
  331
  512
  765
  1,110
  1,567
  2,154
  2,891
  3,796
  4,884
  6,169
  7,661
  9,366
  11,289
  13,432
  15,794
  18,372
  21,163
  24,162
  27,365
  30,766
  34,362
  38,148
  42,121
  46,280
  50,625
  55,155
  59,873
  64,781
  69,885
  75,190
Variable operating expenses, $m
  127
  196
  293
  425
  599
  824
  1,105
  1,451
  1,867
  2,358
  2,927
  3,579
  4,314
  5,133
  6,035
  7,020
  8,087
  9,233
  10,457
  11,757
  13,131
  14,578
  16,096
  17,685
  19,346
  21,077
  22,879
  24,755
  26,705
  28,733
Fixed operating expenses, $m
  40
  41
  42
  43
  43
  44
  45
  46
  47
  48
  50
  51
  52
  53
  54
  55
  56
  58
  59
  60
  62
  63
  64
  66
  67
  69
  70
  72
  73
  75
Total operating expenses, $m
  167
  237
  335
  468
  642
  868
  1,150
  1,497
  1,914
  2,406
  2,977
  3,630
  4,366
  5,186
  6,089
  7,075
  8,143
  9,291
  10,516
  11,817
  13,193
  14,641
  16,160
  17,751
  19,413
  21,146
  22,949
  24,827
  26,778
  28,808
Operating income, $m
  164
  275
  430
  643
  924
  1,285
  1,740
  2,298
  2,970
  3,762
  4,684
  5,736
  6,923
  8,246
  9,704
  11,296
  13,019
  14,871
  16,849
  18,949
  21,169
  23,507
  25,961
  28,529
  31,212
  34,010
  36,923
  39,954
  43,106
  46,382
EBITDA, $m
  167
  280
  437
  652
  937
  1,303
  1,764
  2,329
  3,009
  3,813
  4,745
  5,811
  7,014
  8,354
  9,831
  11,443
  13,189
  15,064
  17,068
  19,195
  21,444
  23,812
  26,298
  28,899
  31,617
  34,451
  37,402
  40,472
  43,665
  46,984
Interest expense (income), $m
  0
  0
  1
  2
  3
  5
  7
  10
  14
  19
  25
  32
  40
  49
  59
  71
  84
  97
  112
  128
  146
  164
  183
  203
  225
  247
  270
  295
  320
  346
  374
Earnings before tax, $m
  164
  274
  429
  640
  919
  1,278
  1,729
  2,284
  2,950
  3,737
  4,652
  5,696
  6,874
  8,187
  9,633
  11,212
  12,922
  14,759
  16,720
  18,803
  21,005
  23,324
  25,757
  28,305
  30,965
  33,739
  36,628
  39,634
  42,760
  46,008
Tax expense, $m
  44
  74
  116
  173
  248
  345
  467
  617
  797
  1,009
  1,256
  1,538
  1,856
  2,210
  2,601
  3,027
  3,489
  3,985
  4,514
  5,077
  5,671
  6,297
  6,954
  7,642
  8,361
  9,110
  9,890
  10,701
  11,545
  12,422
Net income, $m
  120
  200
  313
  467
  671
  933
  1,263
  1,667
  2,154
  2,728
  3,396
  4,158
  5,018
  5,976
  7,032
  8,185
  9,433
  10,774
  12,206
  13,726
  15,334
  17,026
  18,803
  20,662
  22,604
  24,630
  26,739
  28,933
  31,215
  33,586

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
  193
  299
  447
  649
  915
  1,258
  1,689
  2,217
  2,853
  3,604
  4,475
  5,471
  6,594
  7,846
  9,225
  10,731
  12,361
  14,113
  15,984
  17,971
  20,071
  22,282
  24,603
  27,033
  29,571
  32,217
  34,972
  37,839
  40,821
  43,919
Adjusted assets (=assets-cash), $m
  193
  299
  447
  649
  915
  1,258
  1,689
  2,217
  2,853
  3,604
  4,475
  5,471
  6,594
  7,846
  9,225
  10,731
  12,361
  14,113
  15,984
  17,971
  20,071
  22,282
  24,603
  27,033
  29,571
  32,217
  34,972
  37,839
  40,821
  43,919
Revenue / Adjusted assets
  1.715
  1.712
  1.711
  1.710
  1.713
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
  1.712
Average production assets, $m
  13
  20
  31
  44
  63
  86
  116
  152
  195
  247
  306
  375
  452
  537
  632
  735
  847
  966
  1,095
  1,231
  1,374
  1,526
  1,685
  1,851
  2,025
  2,206
  2,395
  2,591
  2,795
  3,008
Working capital, $m
  88
  136
  204
  295
  417
  573
  769
  1,010
  1,299
  1,641
  2,038
  2,491
  3,003
  3,573
  4,201
  4,887
  5,629
  6,427
  7,279
  8,184
  9,140
  10,147
  11,204
  12,311
  13,466
  14,671
  15,926
  17,232
  18,589
  20,000
Total debt, $m
  12
  30
  55
  90
  135
  193
  267
  356
  464
  592
  740
  909
  1,100
  1,313
  1,548
  1,804
  2,081
  2,379
  2,697
  3,034
  3,392
  3,767
  4,162
  4,575
  5,006
  5,456
  5,925
  6,412
  6,919
  7,446
Total liabilities, $m
  33
  51
  76
  110
  156
  214
  287
  377
  485
  613
  761
  930
  1,121
  1,334
  1,568
  1,824
  2,101
  2,399
  2,717
  3,055
  3,412
  3,788
  4,183
  4,596
  5,027
  5,477
  5,945
  6,433
  6,940
  7,466
Total equity, $m
  161
  248
  371
  538
  759
  1,044
  1,401
  1,840
  2,368
  2,991
  3,714
  4,541
  5,473
  6,512
  7,657
  8,907
  10,260
  11,714
  13,267
  14,916
  16,659
  18,494
  20,421
  22,437
  24,544
  26,740
  29,027
  31,407
  33,881
  36,453
Total liabilities and equity, $m
  194
  299
  447
  648
  915
  1,258
  1,688
  2,217
  2,853
  3,604
  4,475
  5,471
  6,594
  7,846
  9,225
  10,731
  12,361
  14,113
  15,984
  17,971
  20,071
  22,282
  24,604
  27,033
  29,571
  32,217
  34,972
  37,840
  40,821
  43,919
Debt-to-equity ratio
  0.080
  0.120
  0.150
  0.170
  0.180
  0.190
  0.190
  0.190
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
Adjusted equity ratio
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  120
  200
  313
  467
  671
  933
  1,263
  1,667
  2,154
  2,728
  3,396
  4,158
  5,018
  5,976
  7,032
  8,185
  9,433
  10,774
  12,206
  13,726
  15,334
  17,026
  18,803
  20,662
  22,604
  24,630
  26,739
  28,933
  31,215
  33,586
Depreciation, amort., depletion, $m
  3
  5
  7
  10
  13
  18
  24
  31
  40
  50
  61
  75
  90
  107
  126
  147
  169
  193
  219
  246
  275
  305
  337
  370
  405
  441
  479
  518
  559
  602
Funds from operations, $m
  123
  205
  320
  477
  684
  951
  1,286
  1,698
  2,194
  2,778
  3,457
  4,233
  5,109
  6,084
  7,159
  8,332
  9,602
  10,967
  12,425
  13,973
  15,609
  17,332
  19,140
  21,033
  23,009
  25,071
  27,218
  29,451
  31,774
  34,188
Change in working capital, $m
  33
  48
  67
  92
  121
  156
  196
  241
  290
  342
  397
  454
  512
  570
  628
  686
  742
  798
  852
  905
  956
  1,007
  1,057
  1,106
  1,156
  1,205
  1,255
  1,306
  1,358
  1,411
Cash from operations, $m
  90
  157
  252
  385
  563
  795
  1,090
  1,458
  1,904
  2,437
  3,060
  3,780
  4,597
  5,514
  6,530
  7,646
  8,860
  10,169
  11,573
  13,068
  14,652
  16,325
  18,083
  19,926
  21,854
  23,866
  25,963
  28,146
  30,416
  32,777
Maintenance CAPEX, $m
  -2
  -3
  -4
  -6
  -9
  -13
  -17
  -23
  -30
  -39
  -49
  -61
  -75
  -90
  -107
  -126
  -147
  -169
  -193
  -219
  -246
  -275
  -305
  -337
  -370
  -405
  -441
  -479
  -518
  -559
New CAPEX, $m
  -5
  -7
  -10
  -14
  -18
  -23
  -29
  -36
  -44
  -51
  -60
  -68
  -77
  -86
  -94
  -103
  -112
  -120
  -128
  -136
  -144
  -151
  -159
  -166
  -174
  -181
  -189
  -196
  -204
  -212
Cash from investing activities, $m
  -7
  -10
  -14
  -20
  -27
  -36
  -46
  -59
  -74
  -90
  -109
  -129
  -152
  -176
  -201
  -229
  -259
  -289
  -321
  -355
  -390
  -426
  -464
  -503
  -544
  -586
  -630
  -675
  -722
  -771
Free cash flow, $m
  83
  147
  238
  365
  536
  759
  1,044
  1,398
  1,830
  2,346
  2,951
  3,650
  4,445
  5,338
  6,329
  7,417
  8,601
  9,880
  11,251
  12,713
  14,262
  15,898
  17,619
  19,423
  21,310
  23,280
  25,333
  27,470
  29,694
  32,005
Issuance/(repayment) of debt, $m
  12
  18
  25
  34
  45
  58
  73
  90
  108
  128
  148
  169
  191
  213
  235
  256
  277
  298
  318
  338
  357
  376
  395
  413
  431
  450
  468
  487
  507
  527
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  12
  18
  25
  34
  45
  58
  73
  90
  108
  128
  148
  169
  191
  213
  235
  256
  277
  298
  318
  338
  357
  376
  395
  413
  431
  450
  468
  487
  507
  527
Total cash flow (excl. dividends), $m
  96
  165
  263
  399
  581
  817
  1,117
  1,488
  1,938
  2,474
  3,099
  3,819
  4,636
  5,551
  6,563
  7,673
  8,878
  10,178
  11,569
  13,051
  14,619
  16,274
  18,013
  19,836
  21,741
  23,730
  25,801
  27,958
  30,201
  32,532
Retained Cash Flow (-), $m
  -60
  -88
  -123
  -167
  -221
  -285
  -357
  -439
  -528
  -623
  -723
  -827
  -932
  -1,039
  -1,145
  -1,250
  -1,353
  -1,454
  -1,553
  -1,649
  -1,743
  -1,835
  -1,926
  -2,016
  -2,106
  -2,196
  -2,287
  -2,380
  -2,474
  -2,572
Prev. year cash balance distribution, $m
  293
  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
  329
  77
  140
  232
  360
  533
  759
  1,049
  1,411
  1,851
  2,376
  2,993
  3,704
  4,512
  5,418
  6,423
  7,525
  8,724
  10,017
  11,402
  12,876
  14,439
  16,087
  17,819
  19,635
  21,533
  23,514
  25,578
  27,726
  29,960
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
  315
  71
  122
  191
  279
  386
  513
  656
  810
  970
  1,128
  1,277
  1,408
  1,515
  1,591
  1,632
  1,637
  1,607
  1,542
  1,449
  1,332
  1,198
  1,054
  908
  764
  628
  505
  396
  303
  226
Current shareholders' claim on cash, %
  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
  100.0

Enanta Pharmaceuticals, Inc. is a research and development-focused biotechnology company. The Company uses chemistry-driven approach and drug discovery solutions to create small molecule drugs for the treatment of viral infections and liver diseases. Its research and development programs are focused on three disease targets: non-alcoholic steatohepatitis (NASH)/ primary biliary cholangitis (PBC), respiratory syncytial virus (RSV) and hepatitis B virus (HBV). It has discovered novel protease inhibitors that are members of the direct-acting-antiviral (DAA) inhibitor classes designed for use against the hepatitis C virus (HCV). These protease inhibitors, developed through its collaboration with AbbVie Inc. (AbbVie), include paritaprevir and glecaprevir (ABT-493). Its product candidates also include EDP-305, which is a farnesoid X receptor (FXR) agonist product candidate for NASH and PBC, and EDP-938, which is a clinical candidate for RSV.

FINANCIAL RATIOS  of  Enanta Pharmaceuticals, Inc. (ENTA)

Valuation Ratios
P/E Ratio 109
Price to Sales 19
Price to Book 6.5
Price to Tangible Book
Price to Cash Flow 37
Price to Free Cash Flow 39.2
Growth Rates
Sales Growth Rate 17%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -40%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0.3%
Total Debt to Equity 0.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.9%
Ret/ On Assets - 3 Yr. Avg. 17.9%
Return On Total Capital 6.3%
Ret/ On T. Cap. - 3 Yr. Avg. 18.6%
Return On Equity 6.3%
Return On Equity - 3 Yr. Avg. 18.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 28.2%
EBITDA Margin - 3 Yr. Avg. 48.7%
Operating Margin 24.3%
Oper. Margin - 3 Yr. Avg. 45.5%
Pre-Tax Margin 26.2%
Pre-Tax Margin - 3 Yr. Avg. 47.1%
Net Profit Margin 17.5%
Net Profit Margin - 3 Yr. Avg. 30.5%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 34.5%
Payout Ratio 0%

ENTA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENTA stock intrinsic value calculation we used $207 million for the last fiscal year's total revenue generated by Enanta Pharmaceuticals, Inc.. The default revenue input number comes from 0001 income statement of Enanta Pharmaceuticals, 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 ENTA 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 ENTA is calculated based on our internal credit rating of Enanta Pharmaceuticals, 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 Enanta Pharmaceuticals, 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 ENTA stock the variable cost ratio is equal to 38.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $39 million in the base year in the intrinsic value calculation for ENTA 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 Enanta Pharmaceuticals, Inc..

Corporate tax rate of 27% is the nominal tax rate for Enanta Pharmaceuticals, 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 ENTA 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 ENTA are equal to 4%.

Life of production assets of 3.3 years is the average useful life of capital assets used in Enanta Pharmaceuticals, 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 ENTA is equal to 26.6%. 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 - $393.679 million for Enanta Pharmaceuticals, 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 19.459 million for Enanta Pharmaceuticals, 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 Enanta Pharmaceuticals, Inc. at the current share price and the inputted number of shares is $2.0 billion.

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