Intrinsic value of Innoviva, Inc. - INVA

Previous Close

$14.14

  Intrinsic Value

$50.12

stock screener

  Rating & Target

str. buy

+254%

Previous close

$14.14

 
Intrinsic value

$50.12

 
Up/down potential

+254%

 
Rating

str. buy

We calculate the intrinsic value of INVA 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 1.4

 

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, %
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.26
  7.04
  6.83
  6.65
  6.49
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
Revenue, $m
  300
  342
  386
  433
  483
  535
  590
  648
  708
  770
  836
  903
  974
  1,047
  1,123
  1,202
  1,284
  1,369
  1,458
  1,551
  1,647
  1,747
  1,852
  1,960
  2,074
  2,192
  2,316
  2,445
  2,580
  2,721
Variable operating expenses, $m
  46
  52
  59
  66
  74
  82
  90
  99
  108
  118
  128
  138
  149
  160
  172
  184
  196
  210
  223
  237
  252
  267
  283
  300
  317
  335
  354
  374
  395
  416
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
  46
  52
  59
  66
  74
  82
  90
  99
  108
  118
  128
  138
  149
  160
  172
  184
  196
  210
  223
  237
  252
  267
  283
  300
  317
  335
  354
  374
  395
  416
Operating income, $m
  254
  289
  327
  367
  409
  454
  500
  549
  600
  653
  708
  765
  825
  887
  951
  1,018
  1,088
  1,160
  1,235
  1,313
  1,395
  1,480
  1,568
  1,660
  1,757
  1,857
  1,962
  2,071
  2,185
  2,305
EBITDA, $m
  254
  289
  327
  367
  409
  454
  500
  549
  600
  653
  708
  765
  825
  887
  951
  1,018
  1,088
  1,160
  1,235
  1,314
  1,395
  1,480
  1,569
  1,661
  1,757
  1,857
  1,962
  2,071
  2,186
  2,305
Interest expense (income), $m
  49
  21
  24
  27
  31
  35
  39
  43
  48
  52
  57
  62
  68
  73
  79
  85
  91
  97
  104
  111
  118
  126
  134
  142
  150
  159
  169
  178
  188
  199
  210
Earnings before tax, $m
  233
  266
  300
  336
  374
  415
  457
  501
  547
  595
  645
  698
  752
  808
  866
  927
  990
  1,056
  1,124
  1,195
  1,269
  1,346
  1,426
  1,510
  1,597
  1,688
  1,783
  1,883
  1,986
  2,095
Tax expense, $m
  63
  72
  81
  91
  101
  112
  123
  135
  148
  161
  174
  188
  203
  218
  234
  250
  267
  285
  304
  323
  343
  363
  385
  408
  431
  456
  481
  508
  536
  566
Net income, $m
  170
  194
  219
  245
  273
  303
  334
  366
  400
  435
  471
  509
  549
  590
  632
  677
  723
  771
  821
  872
  926
  983
  1,041
  1,102
  1,166
  1,232
  1,302
  1,374
  1,450
  1,529

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
  504
  574
  649
  728
  812
  900
  992
  1,089
  1,190
  1,295
  1,404
  1,518
  1,636
  1,759
  1,887
  2,020
  2,158
  2,302
  2,451
  2,606
  2,768
  2,936
  3,112
  3,295
  3,485
  3,684
  3,892
  4,109
  4,336
  4,573
Adjusted assets (=assets-cash), $m
  504
  574
  649
  728
  812
  900
  992
  1,089
  1,190
  1,295
  1,404
  1,518
  1,636
  1,759
  1,887
  2,020
  2,158
  2,302
  2,451
  2,606
  2,768
  2,936
  3,112
  3,295
  3,485
  3,684
  3,892
  4,109
  4,336
  4,573
Revenue / Adjusted assets
  0.595
  0.596
  0.595
  0.595
  0.595
  0.594
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
Average production assets, $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
Working capital, $m
  90
  103
  116
  130
  145
  161
  178
  195
  213
  232
  251
  272
  293
  315
  338
  362
  387
  412
  439
  467
  496
  526
  557
  590
  624
  660
  697
  736
  777
  819
Total debt, $m
  441
  504
  572
  643
  718
  797
  880
  967
  1,058
  1,152
  1,251
  1,353
  1,459
  1,570
  1,685
  1,804
  1,928
  2,057
  2,192
  2,331
  2,477
  2,628
  2,786
  2,950
  3,122
  3,301
  3,487
  3,682
  3,886
  4,099
Total liabilities, $m
  453
  516
  583
  655
  730
  809
  892
  979
  1,070
  1,164
  1,262
  1,365
  1,471
  1,582
  1,697
  1,816
  1,940
  2,069
  2,203
  2,343
  2,488
  2,640
  2,797
  2,962
  3,133
  3,312
  3,499
  3,694
  3,898
  4,111
Total equity, $m
  51
  58
  66
  74
  82
  91
  100
  110
  120
  131
  142
  153
  165
  178
  191
  204
  218
  232
  248
  263
  280
  297
  314
  333
  352
  372
  393
  415
  438
  462
Total liabilities and equity, $m
  504
  574
  649
  729
  812
  900
  992
  1,089
  1,190
  1,295
  1,404
  1,518
  1,636
  1,760
  1,888
  2,020
  2,158
  2,301
  2,451
  2,606
  2,768
  2,937
  3,111
  3,295
  3,485
  3,684
  3,892
  4,109
  4,336
  4,573
Debt-to-equity ratio
  8.670
  8.700
  8.720
  8.740
  8.760
  8.770
  8.780
  8.790
  8.800
  8.810
  8.820
  8.820
  8.830
  8.830
  8.840
  8.840
  8.850
  8.850
  8.850
  8.860
  8.860
  8.860
  8.860
  8.870
  8.870
  8.870
  8.870
  8.870
  8.870
  8.880
Adjusted equity ratio
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101
  0.101

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  170
  194
  219
  245
  273
  303
  334
  366
  400
  435
  471
  509
  549
  590
  632
  677
  723
  771
  821
  872
  926
  983
  1,041
  1,102
  1,166
  1,232
  1,302
  1,374
  1,450
  1,529
Depreciation, amort., depletion, $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
  1
  1
Funds from operations, $m
  170
  194
  219
  245
  273
  303
  334
  366
  400
  435
  471
  509
  549
  590
  633
  677
  723
  771
  821
  873
  927
  983
  1,042
  1,103
  1,166
  1,233
  1,302
  1,375
  1,451
  1,530
Change in working capital, $m
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
Cash from operations, $m
  159
  181
  206
  231
  258
  287
  317
  349
  382
  416
  452
  489
  528
  568
  610
  653
  698
  745
  794
  845
  898
  953
  1,010
  1,070
  1,132
  1,197
  1,265
  1,336
  1,410
  1,487
Maintenance CAPEX, $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
  -1
New CAPEX, $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 investing activities, $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
  -1
Free cash flow, $m
  159
  181
  205
  231
  258
  287
  317
  349
  381
  416
  452
  489
  527
  568
  609
  653
  698
  745
  794
  845
  897
  952
  1,010
  1,069
  1,132
  1,197
  1,265
  1,335
  1,409
  1,487
Issuance/(repayment) of debt, $m
  58
  63
  67
  71
  75
  79
  83
  87
  91
  94
  98
  102
  106
  111
  115
  119
  124
  129
  134
  140
  145
  151
  158
  164
  171
  179
  187
  195
  204
  213
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  
  58
  63
  67
  71
  75
  79
  83
  87
  91
  94
  98
  102
  106
  111
  115
  119
  124
  129
  134
  140
  145
  151
  158
  164
  171
  179
  187
  195
  204
  213
Total cash flow (excl. dividends), $m
  217
  244
  273
  302
  334
  366
  400
  435
  472
  510
  550
  591
  634
  678
  724
  772
  822
  874
  928
  984
  1,043
  1,104
  1,167
  1,234
  1,303
  1,376
  1,451
  1,530
  1,613
  1,700
Retained Cash Flow (-), $m
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
Prev. year cash balance distribution, $m
  109
  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
  320
  237
  265
  294
  325
  357
  391
  426
  462
  500
  539
  580
  622
  666
  711
  759
  808
  860
  913
  968
  1,026
  1,087
  1,150
  1,215
  1,284
  1,356
  1,430
  1,509
  1,590
  1,676
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
  307
  217
  231
  242
  252
  259
  264
  266
  265
  262
  256
  247
  236
  224
  209
  193
  176
  158
  141
  123
  106
  90
  75
  62
  50
  40
  31
  23
  17
  13
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

Innoviva, Inc., formerly Theravance, Inc., is engaged in the development, commercialization and financial management of bio-pharmaceuticals. It focuses on the respiratory assets partnered with Glaxo Group Limited (GSK), including RELVAR/BREO ELLIPTA (fluticasone furoate (FF)/vilanterol (VI)) and ANORO ELLIPTA (umeclidinium bromide/vilanterol (UMEC/VI)). Under the Long-Acting Beta2 Agonist (LABA) Collaboration Agreement and the Strategic Alliance Agreement with GSK, the Company is eligible to receive the annual royalties from GSK on sales of RELVAR/BREO ELLIPTA. For other products combined with a LABA from the LABA collaboration, such as ANORO ELLIPTA, royalties are upward tiering and range from 6.5% to 10%. RELVAR/BREO is a once-a-day combination inhaled respiratory medicine consisting of a LABA (VI) and an inhaled corticosteroid (ICS), FF. ANORO ELLIPTA a once-daily medicine combining a long-acting muscarinic antagonist (LAMA), umeclidinium bromide (UMEC), with a LABA.

FINANCIAL RATIOS  of  Innoviva, Inc. (INVA)

Valuation Ratios
P/E Ratio 25.6
Price to Sales 11.4
Price to Book -4.3
Price to Tangible Book
Price to Cash Flow 25.1
Price to Free Cash Flow 25.1
Growth Rates
Sales Growth Rate 148.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 19
Current Ratio 0
LT Debt to Equity -200.6%
Total Debt to Equity -202.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 27.7%
Ret/ On Assets - 3 Yr. Avg. 0.9%
Return On Total Capital 15.9%
Ret/ On T. Cap. - 3 Yr. Avg. -6.4%
Return On Equity -17.2%
Return On Equity - 3 Yr. Avg. -150.9%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 91.8%
EBITDA Margin - 3 Yr. Avg. -177.3%
Operating Margin 81.3%
Oper. Margin - 3 Yr. Avg. -94.8%
Pre-Tax Margin 44.8%
Pre-Tax Margin - 3 Yr. Avg. -305.1%
Net Profit Margin 44.8%
Net Profit Margin - 3 Yr. Avg. -696.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 1.7%

INVA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INVA stock intrinsic value calculation we used $261 million for the last fiscal year's total revenue generated by Innoviva, Inc.. The default revenue input number comes from 0001 income statement of Innoviva, 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 INVA stock valuation model: a) initial revenue growth rate of 14.9% 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 INVA is calculated based on our internal credit rating of Innoviva, 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 Innoviva, 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 INVA stock the variable cost ratio is equal to 15.3%.

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 INVA 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 Innoviva, Inc..

Corporate tax rate of 27% is the nominal tax rate for Innoviva, 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 INVA 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 INVA are equal to 0.1%.

Life of production assets of 0 years is the average useful life of capital assets used in Innoviva, 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 INVA is equal to 30.1%. 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 - $153.583 million for Innoviva, 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 100.989 million for Innoviva, 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 Innoviva, Inc. at the current share price and the inputted number of shares is $1.4 billion.

RELATED COMPANIES Price Int.Val. Rating
GSK GlaxoSmithKlin 40.42 65.66  str.buy
MRK Merck & Compan 79.73 44.01  sell
VRTX Vertex Pharmac 175.79 476.14  str.buy
DVAX Dynavax Techno 4.03 0.19  str.sell
NKTR Nektar Therape 33.72 44.57  buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.