Intrinsic value of Jazz Pharmaceuticals plc - JAZZ

Previous Close

$136.60

  Intrinsic Value

$108.86

stock screener

  Rating & Target

sell

-20%

Previous close

$136.60

 
Intrinsic value

$108.86

 
Up/down potential

-20%

 
Rating

sell

We calculate the intrinsic value of JAZZ 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 7.8

 

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, %
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
  5.22
  5.20
Revenue, $m
  2,065
  2,246
  2,435
  2,631
  2,835
  3,047
  3,268
  3,497
  3,735
  3,983
  4,240
  4,508
  4,787
  5,077
  5,380
  5,695
  6,024
  6,368
  6,726
  7,101
  7,492
  7,901
  8,329
  8,776
  9,245
  9,735
  10,248
  10,785
  11,348
  11,938
Variable operating expenses, $m
  1,388
  1,508
  1,633
  1,763
  1,898
  2,039
  2,185
  2,336
  2,494
  2,658
  2,809
  2,986
  3,171
  3,363
  3,564
  3,773
  3,991
  4,218
  4,456
  4,704
  4,963
  5,234
  5,517
  5,814
  6,124
  6,448
  6,788
  7,144
  7,517
  7,908
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
  1,388
  1,508
  1,633
  1,763
  1,898
  2,039
  2,185
  2,336
  2,494
  2,658
  2,809
  2,986
  3,171
  3,363
  3,564
  3,773
  3,991
  4,218
  4,456
  4,704
  4,963
  5,234
  5,517
  5,814
  6,124
  6,448
  6,788
  7,144
  7,517
  7,908
Operating income, $m
  677
  738
  802
  868
  937
  1,009
  1,083
  1,160
  1,241
  1,324
  1,431
  1,522
  1,616
  1,714
  1,816
  1,923
  2,034
  2,150
  2,271
  2,397
  2,529
  2,667
  2,812
  2,963
  3,121
  3,286
  3,459
  3,641
  3,831
  4,030
EBITDA, $m
  821
  893
  968
  1,046
  1,127
  1,211
  1,299
  1,390
  1,484
  1,583
  1,685
  1,791
  1,902
  2,018
  2,138
  2,263
  2,394
  2,531
  2,673
  2,822
  2,977
  3,140
  3,310
  3,488
  3,674
  3,869
  4,073
  4,286
  4,510
  4,744
Interest expense (income), $m
  0
  86
  98
  111
  124
  137
  151
  166
  181
  197
  213
  230
  248
  266
  286
  306
  326
  348
  371
  394
  419
  445
  472
  500
  530
  560
  593
  626
  662
  699
  738
Earnings before tax, $m
  591
  640
  691
  745
  800
  858
  917
  979
  1,044
  1,111
  1,201
  1,274
  1,349
  1,428
  1,510
  1,596
  1,686
  1,779
  1,876
  1,978
  2,084
  2,195
  2,312
  2,433
  2,560
  2,694
  2,833
  2,979
  3,132
  3,292
Tax expense, $m
  160
  173
  187
  201
  216
  232
  248
  264
  282
  300
  324
  344
  364
  386
  408
  431
  455
  480
  507
  534
  563
  593
  624
  657
  691
  727
  765
  804
  846
  889
Net income, $m
  431
  467
  505
  544
  584
  626
  670
  715
  762
  811
  877
  930
  985
  1,043
  1,103
  1,165
  1,230
  1,299
  1,370
  1,444
  1,521
  1,603
  1,687
  1,776
  1,869
  1,966
  2,068
  2,175
  2,286
  2,404

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
  5,124
  5,574
  6,042
  6,529
  7,036
  7,562
  8,109
  8,677
  9,268
  9,882
  10,521
  11,186
  11,878
  12,598
  13,349
  14,132
  14,949
  15,801
  16,691
  17,620
  18,591
  19,606
  20,667
  21,777
  22,939
  24,155
  25,429
  26,762
  28,159
  29,623
Adjusted assets (=assets-cash), $m
  5,124
  5,574
  6,042
  6,529
  7,036
  7,562
  8,109
  8,677
  9,268
  9,882
  10,521
  11,186
  11,878
  12,598
  13,349
  14,132
  14,949
  15,801
  16,691
  17,620
  18,591
  19,606
  20,667
  21,777
  22,939
  24,155
  25,429
  26,762
  28,159
  29,623
Revenue / Adjusted assets
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
Average production assets, $m
  2,274
  2,473
  2,681
  2,897
  3,122
  3,355
  3,598
  3,850
  4,112
  4,385
  4,668
  4,963
  5,270
  5,590
  5,923
  6,271
  6,633
  7,011
  7,406
  7,818
  8,249
  8,699
  9,170
  9,663
  10,178
  10,718
  11,283
  11,874
  12,494
  13,144
Working capital, $m
  105
  115
  124
  134
  145
  155
  167
  178
  190
  203
  216
  230
  244
  259
  274
  290
  307
  325
  343
  362
  382
  403
  425
  448
  471
  496
  523
  550
  579
  609
Total debt, $m
  1,817
  2,049
  2,289
  2,540
  2,800
  3,071
  3,352
  3,644
  3,947
  4,263
  4,592
  4,933
  5,289
  5,659
  6,045
  6,448
  6,867
  7,305
  7,763
  8,240
  8,739
  9,261
  9,807
  10,377
  10,975
  11,600
  12,254
  12,940
  13,658
  14,410
Total liabilities, $m
  2,634
  2,865
  3,106
  3,356
  3,616
  3,887
  4,168
  4,460
  4,764
  5,079
  5,408
  5,749
  6,105
  6,476
  6,862
  7,264
  7,684
  8,122
  8,579
  9,057
  9,556
  10,077
  10,623
  11,194
  11,791
  12,416
  13,070
  13,756
  14,474
  15,226
Total equity, $m
  2,490
  2,709
  2,937
  3,173
  3,419
  3,675
  3,941
  4,217
  4,504
  4,803
  5,113
  5,436
  5,773
  6,123
  6,488
  6,868
  7,265
  7,679
  8,112
  8,563
  9,035
  9,528
  10,044
  10,584
  11,148
  11,740
  12,358
  13,006
  13,685
  14,397
Total liabilities and equity, $m
  5,124
  5,574
  6,043
  6,529
  7,035
  7,562
  8,109
  8,677
  9,268
  9,882
  10,521
  11,185
  11,878
  12,599
  13,350
  14,132
  14,949
  15,801
  16,691
  17,620
  18,591
  19,605
  20,667
  21,778
  22,939
  24,156
  25,428
  26,762
  28,159
  29,623
Debt-to-equity ratio
  0.730
  0.760
  0.780
  0.800
  0.820
  0.840
  0.850
  0.860
  0.880
  0.890
  0.900
  0.910
  0.920
  0.920
  0.930
  0.940
  0.950
  0.950
  0.960
  0.960
  0.970
  0.970
  0.980
  0.980
  0.980
  0.990
  0.990
  0.990
  1.000
  1.000
Adjusted equity ratio
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486
  0.486

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  431
  467
  505
  544
  584
  626
  670
  715
  762
  811
  877
  930
  985
  1,043
  1,103
  1,165
  1,230
  1,299
  1,370
  1,444
  1,521
  1,603
  1,687
  1,776
  1,869
  1,966
  2,068
  2,175
  2,286
  2,404
Depreciation, amort., depletion, $m
  144
  154
  166
  177
  190
  202
  216
  229
  243
  258
  254
  270
  286
  304
  322
  341
  360
  381
  402
  425
  448
  473
  498
  525
  553
  582
  613
  645
  679
  714
Funds from operations, $m
  575
  622
  670
  721
  774
  828
  885
  944
  1,006
  1,070
  1,131
  1,200
  1,272
  1,346
  1,425
  1,506
  1,591
  1,680
  1,772
  1,869
  1,970
  2,075
  2,186
  2,301
  2,422
  2,549
  2,681
  2,820
  2,965
  3,118
Change in working capital, $m
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
Cash from operations, $m
  566
  612
  661
  711
  763
  818
  874
  933
  994
  1,057
  1,117
  1,186
  1,257
  1,332
  1,409
  1,490
  1,574
  1,662
  1,754
  1,850
  1,950
  2,054
  2,164
  2,279
  2,398
  2,524
  2,655
  2,793
  2,937
  3,088
Maintenance CAPEX, $m
  -113
  -124
  -134
  -146
  -157
  -170
  -182
  -196
  -209
  -223
  -238
  -254
  -270
  -286
  -304
  -322
  -341
  -360
  -381
  -402
  -425
  -448
  -473
  -498
  -525
  -553
  -582
  -613
  -645
  -679
New CAPEX, $m
  -192
  -200
  -208
  -216
  -225
  -234
  -243
  -252
  -262
  -273
  -283
  -295
  -307
  -320
  -333
  -347
  -362
  -378
  -395
  -412
  -431
  -450
  -471
  -493
  -516
  -540
  -565
  -592
  -620
  -649
Cash from investing activities, $m
  -305
  -324
  -342
  -362
  -382
  -404
  -425
  -448
  -471
  -496
  -521
  -549
  -577
  -606
  -637
  -669
  -703
  -738
  -776
  -814
  -856
  -898
  -944
  -991
  -1,041
  -1,093
  -1,147
  -1,205
  -1,265
  -1,328
Free cash flow, $m
  261
  289
  319
  349
  381
  414
  449
  485
  522
  561
  596
  637
  681
  725
  772
  821
  871
  923
  978
  1,035
  1,094
  1,156
  1,220
  1,287
  1,358
  1,431
  1,508
  1,588
  1,672
  1,759
Issuance/(repayment) of debt, $m
  221
  231
  241
  250
  260
  271
  281
  292
  304
  316
  328
  342
  356
  370
  386
  402
  420
  438
  457
  478
  499
  522
  546
  571
  597
  625
  654
  685
  718
  752
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  
  221
  231
  241
  250
  260
  271
  281
  292
  304
  316
  328
  342
  356
  370
  386
  402
  420
  438
  457
  478
  499
  522
  546
  571
  597
  625
  654
  685
  718
  752
Total cash flow (excl. dividends), $m
  482
  521
  559
  600
  641
  685
  730
  777
  826
  877
  924
  979
  1,036
  1,096
  1,158
  1,223
  1,291
  1,361
  1,435
  1,512
  1,593
  1,678
  1,766
  1,858
  1,955
  2,056
  2,162
  2,273
  2,390
  2,512
Retained Cash Flow (-), $m
  -212
  -219
  -228
  -237
  -246
  -256
  -266
  -276
  -287
  -299
  -310
  -323
  -336
  -350
  -365
  -380
  -397
  -414
  -432
  -452
  -472
  -493
  -516
  -540
  -565
  -591
  -619
  -648
  -679
  -711
Prev. year cash balance distribution, $m
  479
  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
  749
  302
  332
  363
  395
  429
  464
  501
  539
  578
  614
  656
  700
  746
  793
  843
  894
  947
  1,003
  1,061
  1,121
  1,184
  1,250
  1,319
  1,390
  1,465
  1,543
  1,625
  1,711
  1,800
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
  718
  276
  289
  299
  306
  311
  314
  313
  309
  303
  291
  280
  266
  250
  233
  214
  194
  174
  154
  135
  116
  98
  82
  67
  54
  43
  33
  25
  19
  14
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

Jazz Pharmaceuticals Public Limited Company, a biopharmaceutical company, identifies, develops, and commercializes pharmaceutical products for various medical needs in the United States, Europe, and internationally. The company has a portfolio of products and product candidates with a focus in the areas of sleep and hematology/oncology. It markets Xyrem, an oral solution for the treatment of cataplexy and excessive daytime sleepiness (EDS) in patients with narcolepsy; Erwinaze to treat acute lymphoblastic leukemia (ALL); Defitelio for the treatment and prevention of severe hepatic veno-occlusive disease, a potentially life-threatening complication of hematopoietic stem cell transplantation; and Prialt, an intrathecally administered infusion of ziconotide for the management of severe chronic pain. The company also develops JZP-110, a late-stage investigational compound, which is in phase III clinical trail for the treatment of EDS in narcolepsy and obstructive sleep apnea; and JZP-386, a deuterium-modified analog of sodium oxybate that is completed phase I clinical trail for use in patients with narcolepsy. In addition, it sells psychiatry and other products. The company is headquartered in Dublin, Ireland.

FINANCIAL RATIOS  of  Jazz Pharmaceuticals plc (JAZZ)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

JAZZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JAZZ stock intrinsic value calculation we used $1891 million for the last fiscal year's total revenue generated by Jazz Pharmaceuticals plc. The default revenue input number comes from 0001 income statement of Jazz Pharmaceuticals plc. 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 JAZZ stock valuation model: a) initial revenue growth rate of 9.2% 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 JAZZ is calculated based on our internal credit rating of Jazz Pharmaceuticals plc, 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 Jazz Pharmaceuticals plc.
    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 JAZZ stock the variable cost ratio is equal to 67.3%.

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 JAZZ 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 Jazz Pharmaceuticals plc.

Corporate tax rate of 27% is the nominal tax rate for Jazz Pharmaceuticals plc. 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 JAZZ 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 JAZZ are equal to 110.1%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Jazz Pharmaceuticals plc 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 JAZZ is equal to 5.1%. 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 - $2757.422 million for Jazz Pharmaceuticals plc - 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 57.055 million for Jazz Pharmaceuticals plc 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 Jazz Pharmaceuticals plc at the current share price and the inputted number of shares is $7.8 billion.

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