Intrinsic value of Enanta Pharmaceuticals - ENTA

Previous Close

$122.34

  Intrinsic Value

$42.02

stock screener

  Rating & Target

str. sell

-66%

Previous close

$122.34

 
Intrinsic value

$42.02

 
Up/down potential

-66%

 
Rating

str. sell

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 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 2.3

 

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, %
  16.50
  15.35
  14.32
  13.38
  12.55
  11.79
  11.11
  10.50
  9.95
  9.46
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
Revenue, $m
  120
  138
  158
  179
  202
  226
  251
  277
  305
  334
  364
  395
  427
  461
  497
  533
  571
  611
  652
  694
  739
  785
  833
  883
  936
  990
  1,047
  1,106
  1,168
  1,233
Variable operating expenses, $m
  78
  90
  103
  117
  132
  147
  164
  181
  199
  217
  237
  257
  279
  301
  324
  348
  372
  398
  425
  453
  482
  512
  543
  576
  610
  646
  683
  721
  762
  804
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
  78
  90
  103
  117
  132
  147
  164
  181
  199
  217
  237
  257
  279
  301
  324
  348
  372
  398
  425
  453
  482
  512
  543
  576
  610
  646
  683
  721
  762
  804
Operating income, $m
  42
  48
  55
  62
  70
  79
  87
  96
  106
  116
  127
  137
  149
  161
  173
  186
  199
  212
  227
  242
  257
  273
  290
  307
  326
  345
  364
  385
  407
  429
EBITDA, $m
  43
  49
  56
  64
  72
  80
  89
  99
  108
  119
  129
  140
  152
  164
  177
  190
  203
  217
  232
  247
  263
  279
  296
  314
  333
  352
  373
  394
  416
  439
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
Earnings before tax, $m
  42
  48
  55
  62
  69
  77
  86
  94
  104
  113
  123
  134
  145
  156
  168
  180
  193
  206
  220
  234
  249
  265
  281
  298
  315
  334
  353
  373
  393
  415
Tax expense, $m
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  33
  36
  39
  42
  45
  49
  52
  56
  59
  63
  67
  72
  76
  80
  85
  90
  95
  101
  106
  112
Net income, $m
  30
  35
  40
  45
  51
  56
  63
  69
  76
  83
  90
  98
  106
  114
  123
  132
  141
  151
  161
  171
  182
  193
  205
  217
  230
  244
  257
  272
  287
  303

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
  144
  166
  190
  215
  242
  271
  301
  332
  365
  400
  436
  473
  513
  553
  595
  639
  685
  732
  781
  833
  886
  941
  999
  1,059
  1,122
  1,187
  1,255
  1,327
  1,401
  1,478
Adjusted assets (=assets-cash), $m
  144
  166
  190
  215
  242
  271
  301
  332
  365
  400
  436
  473
  513
  553
  595
  639
  685
  732
  781
  833
  886
  941
  999
  1,059
  1,122
  1,187
  1,255
  1,327
  1,401
  1,478
Revenue / Adjusted assets
  0.833
  0.831
  0.832
  0.833
  0.835
  0.834
  0.834
  0.834
  0.836
  0.835
  0.835
  0.835
  0.832
  0.834
  0.835
  0.834
  0.834
  0.835
  0.835
  0.833
  0.834
  0.834
  0.834
  0.834
  0.834
  0.834
  0.834
  0.833
  0.834
  0.834
Average production assets, $m
  9
  11
  12
  14
  16
  18
  20
  22
  24
  26
  28
  31
  33
  36
  39
  42
  45
  48
  51
  54
  58
  61
  65
  69
  73
  77
  82
  86
  91
  96
Working capital, $m
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
Total debt, $m
  4
  9
  14
  19
  24
  30
  36
  42
  49
  56
  63
  71
  79
  87
  96
  104
  114
  123
  133
  144
  154
  166
  177
  189
  202
  215
  229
  243
  258
  274
Total liabilities, $m
  29
  34
  38
  43
  49
  55
  61
  67
  74
  81
  88
  96
  104
  112
  120
  129
  138
  148
  158
  168
  179
  190
  202
  214
  227
  240
  254
  268
  283
  299
Total equity, $m
  115
  132
  151
  172
  193
  216
  240
  265
  292
  319
  348
  378
  409
  441
  475
  510
  546
  584
  624
  664
  707
  751
  797
  845
  895
  947
  1,002
  1,059
  1,118
  1,180
Total liabilities and equity, $m
  144
  166
  189
  215
  242
  271
  301
  332
  366
  400
  436
  474
  513
  553
  595
  639
  684
  732
  782
  832
  886
  941
  999
  1,059
  1,122
  1,187
  1,256
  1,327
  1,401
  1,479
Debt-to-equity ratio
  0.040
  0.070
  0.090
  0.110
  0.130
  0.140
  0.150
  0.160
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
  0.200
  0.200
  0.210
  0.210
  0.210
  0.220
  0.220
  0.220
  0.220
  0.220
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
Adjusted equity ratio
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  30
  35
  40
  45
  51
  56
  63
  69
  76
  83
  90
  98
  106
  114
  123
  132
  141
  151
  161
  171
  182
  193
  205
  217
  230
  244
  257
  272
  287
  303
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
Funds from operations, $m
  31
  36
  41
  46
  52
  58
  64
  71
  78
  85
  93
  101
  109
  118
  127
  136
  145
  155
  166
  177
  188
  199
  212
  224
  238
  251
  266
  281
  296
  313
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  32
  37
  42
  47
  53
  59
  65
  72
  79
  86
  94
  102
  110
  119
  128
  137
  147
  157
  167
  178
  189
  201
  213
  226
  239
  253
  268
  283
  299
  315
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
New CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
Cash from investing activities, $m
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -14
  -14
Free cash flow, $m
  30
  34
  39
  44
  50
  56
  62
  68
  75
  82
  89
  97
  105
  113
  121
  130
  140
  149
  159
  170
  181
  192
  203
  216
  228
  242
  256
  270
  285
  301
Issuance/(repayment) of debt, $m
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
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  
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
Total cash flow (excl. dividends), $m
  35
  39
  44
  49
  55
  61
  68
  74
  81
  89
  96
  104
  113
  121
  130
  139
  149
  159
  169
  180
  191
  203
  215
  228
  241
  255
  269
  284
  300
  317
Retained Cash Flow (-), $m
  -16
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
Prev. year cash balance distribution, $m
  203
  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
  13
  15
  17
  20
  22
  25
  28
  31
  35
  38
  42
  45
  49
  53
  58
  62
  67
  71
  76
  81
  87
  92
  98
  104
  110
  117
  124
  131
  138
  146
Cash available for distribution, $m
  222
  21
  25
  29
  34
  39
  44
  49
  55
  61
  68
  74
  81
  89
  96
  104
  112
  121
  130
  139
  149
  159
  169
  180
  191
  203
  215
  228
  241
  255
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
  212
  19
  22
  24
  26
  28
  30
  31
  32
  32
  32
  32
  31
  30
  28
  26
  24
  22
  20
  18
  15
  13
  11
  9
  7
  6
  5
  4
  3
  2
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 (ENTA)

Valuation Ratios
P/E Ratio 130
Price to Sales 22.7
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow 44.1
Price to Free Cash Flow 46.8
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 $103 million for the last fiscal year's total revenue generated by Enanta Pharmaceuticals. The default revenue input number comes from 2017 income statement of Enanta Pharmaceuticals. 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 16.5% 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, 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.
    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 65.2%.

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 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.

Corporate tax rate of 27% is the nominal tax rate for Enanta Pharmaceuticals. 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 12.5%.

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 7.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Enanta Pharmaceuticals 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 -3.6%. 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 - $302 million for Enanta Pharmaceuticals - 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 million for Enanta Pharmaceuticals 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 at the current share price and the inputted number of shares is $2.3 billion.

RELATED COMPANIES Price Int.Val. Rating
ABBV AbbVie 88.91 93.18  hold
ICPT Intercept Phar 93.80 0.16  str.sell
CNAT Conatus Pharma 4.41 0.24  str.sell

COMPANY NEWS

▶ 2 Stable and 2 Speculative Biotech Stocks to Buy   [Jun-15-18 02:39PM  InvestorPlace]
▶ Enanta Pharmaceuticals: Fiscal 2Q Earnings Snapshot   [May-08-18 04:44PM  Associated Press]
▶ This Small Biotech Is Building on a Surprising Success   [Apr-24-18 09:31AM  Motley Fool]
▶ Enanta Pharmaceuticals posts 1Q profit   [Feb-07-18 05:15PM  Associated Press]
▶ [$$] AbbVie Gives More Juice to Drug Rally   [Jan-29-18 12:16AM  The Wall Street Journal]
▶ [$$] AbbVie Gives More Juice to Drug Rally   [Jan-27-18 10:00AM  The Wall Street Journal]
▶ Enanta Pharmaceuticals posts 4Q profit   [Nov-20-17 04:25PM  Associated Press]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.