Intrinsic value of Lexicon Pharmaceuticals, Inc. - LXRX

Previous Close

$7.62

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$7.62

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of LXRX 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 0.8

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  92
  94
  96
  99
  102
  105
  109
  113
  117
  121
  126
  131
  137
  143
  149
  155
  162
  170
  177
  185
  194
  203
  213
  223
  233
  244
  256
  269
  282
  295
Variable operating expenses, $m
  51
  52
  53
  54
  55
  57
  59
  60
  62
  64
  57
  59
  61
  64
  67
  70
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  115
  121
  127
  133
Fixed operating expenses, $m
  182
  186
  190
  194
  198
  203
  207
  212
  217
  221
  226
  231
  236
  241
  247
  252
  258
  263
  269
  275
  281
  287
  294
  300
  307
  313
  320
  327
  335
  342
Total operating expenses, $m
  233
  238
  243
  248
  253
  260
  266
  272
  279
  285
  283
  290
  297
  305
  314
  322
  331
  339
  349
  358
  368
  378
  390
  400
  412
  423
  435
  448
  462
  475
Operating income, $m
  -141
  -144
  -147
  -149
  -152
  -154
  -157
  -159
  -162
  -164
  -157
  -159
  -161
  -163
  -165
  -167
  -168
  -170
  -172
  -173
  -174
  -175
  -177
  -177
  -178
  -179
  -179
  -179
  -180
  -179
EBITDA, $m
  -129
  -132
  -135
  -137
  -140
  -142
  -145
  -147
  -149
  -151
  -153
  -155
  -157
  -159
  -161
  -163
  -164
  -166
  -167
  -168
  -169
  -170
  -171
  -172
  -172
  -173
  -173
  -173
  -173
  -172
Interest expense (income), $m
  6
  13
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
Earnings before tax, $m
  -154
  -149
  -152
  -155
  -158
  -161
  -164
  -166
  -169
  -172
  -165
  -168
  -171
  -174
  -176
  -179
  -181
  -184
  -186
  -189
  -191
  -193
  -196
  -198
  -200
  -202
  -204
  -205
  -207
  -208
Tax expense, $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
Net income, $m
  -154
  -149
  -152
  -155
  -158
  -161
  -164
  -166
  -169
  -172
  -165
  -168
  -171
  -174
  -176
  -179
  -181
  -184
  -186
  -189
  -191
  -193
  -196
  -198
  -200
  -202
  -204
  -205
  -207
  -208

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
  240
  246
  252
  259
  267
  276
  285
  295
  306
  318
  331
  344
  358
  373
  390
  407
  425
  444
  464
  485
  508
  532
  557
  583
  611
  640
  671
  703
  737
  773
Adjusted assets (=assets-cash), $m
  240
  246
  252
  259
  267
  276
  285
  295
  306
  318
  331
  344
  358
  373
  390
  407
  425
  444
  464
  485
  508
  532
  557
  583
  611
  640
  671
  703
  737
  773
Revenue / Adjusted assets
  0.383
  0.382
  0.381
  0.382
  0.382
  0.380
  0.382
  0.383
  0.382
  0.381
  0.381
  0.381
  0.383
  0.383
  0.382
  0.381
  0.381
  0.383
  0.381
  0.381
  0.382
  0.382
  0.382
  0.383
  0.381
  0.381
  0.382
  0.383
  0.383
  0.382
Average production assets, $m
  68
  70
  72
  74
  76
  79
  81
  84
  87
  91
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  145
  151
  159
  166
  174
  182
  191
  200
  210
  220
Working capital, $m
  -101
  -103
  -106
  -109
  -112
  -116
  -120
  -124
  -128
  -133
  -139
  -144
  -150
  -157
  -163
  -171
  -178
  -186
  -195
  -204
  -213
  -223
  -233
  -244
  -256
  -268
  -281
  -295
  -309
  -324
Total debt, $m
  92
  97
  102
  109
  116
  123
  132
  141
  151
  162
  173
  185
  198
  211
  226
  241
  258
  275
  293
  312
  332
  354
  376
  400
  425
  451
  479
  508
  539
  571
Total liabilities, $m
  216
  221
  227
  233
  240
  248
  257
  266
  276
  286
  298
  310
  322
  336
  351
  366
  382
  399
  418
  437
  457
  478
  501
  525
  550
  576
  604
  633
  663
  696
Total equity, $m
  24
  25
  25
  26
  27
  28
  29
  30
  31
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
Total liabilities and equity, $m
  240
  246
  252
  259
  267
  276
  286
  296
  307
  318
  331
  344
  358
  373
  390
  407
  424
  443
  464
  486
  508
  531
  557
  583
  611
  640
  671
  703
  737
  773
Debt-to-equity ratio
  3.810
  3.930
  4.060
  4.190
  4.330
  4.480
  4.630
  4.780
  4.930
  5.080
  5.230
  5.380
  5.520
  5.660
  5.800
  5.930
  6.060
  6.190
  6.310
  6.430
  6.540
  6.650
  6.760
  6.860
  6.960
  7.050
  7.140
  7.230
  7.310
  7.390
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
  -154
  -149
  -152
  -155
  -158
  -161
  -164
  -166
  -169
  -172
  -165
  -168
  -171
  -174
  -176
  -179
  -181
  -184
  -186
  -189
  -191
  -193
  -196
  -198
  -200
  -202
  -204
  -205
  -207
  -208
Depreciation, amort., depletion, $m
  12
  12
  12
  12
  12
  12
  12
  12
  13
  13
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Funds from operations, $m
  -142
  -137
  -140
  -143
  -146
  -148
  -151
  -154
  -157
  -160
  -162
  -165
  -167
  -170
  -172
  -175
  -177
  -180
  -182
  -184
  -186
  -188
  -190
  -192
  -194
  -196
  -197
  -199
  -200
  -201
Change in working capital, $m
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
Cash from operations, $m
  -140
  -134
  -137
  -140
  -142
  -145
  -147
  -150
  -152
  -155
  -157
  -159
  -161
  -164
  -166
  -168
  -170
  -172
  -173
  -175
  -177
  -178
  -180
  -181
  -182
  -183
  -184
  -185
  -186
  -186
Maintenance CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
New CAPEX, $m
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
Cash from investing activities, $m
  -3
  -4
  -4
  -4
  -4
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -9
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -17
  -17
Free cash flow, $m
  -144
  -138
  -141
  -144
  -147
  -150
  -153
  -155
  -158
  -161
  -164
  -166
  -169
  -171
  -174
  -176
  -179
  -181
  -183
  -186
  -188
  -190
  -192
  -194
  -196
  -198
  -199
  -201
  -202
  -203
Issuance/(repayment) of debt, $m
  -154
  5
  6
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  32
Issuance/(repurchase) of shares, $m
  313
  149
  152
  155
  159
  162
  165
  167
  170
  173
  167
  169
  172
  175
  178
  181
  183
  186
  188
  191
  193
  196
  198
  200
  203
  205
  207
  209
  210
  212
Cash from financing (excl. dividends), $m  
  159
  154
  158
  161
  166
  170
  173
  176
  180
  184
  178
  181
  185
  189
  192
  196
  199
  203
  206
  210
  213
  217
  221
  224
  228
  231
  235
  238
  241
  244
Total cash flow (excl. dividends), $m
  14
  16
  17
  18
  19
  19
  20
  21
  22
  23
  14
  15
  16
  17
  18
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
Retained Cash Flow (-), $m
  -313
  -149
  -152
  -155
  -159
  -162
  -165
  -167
  -170
  -173
  -167
  -169
  -172
  -175
  -178
  -181
  -183
  -186
  -188
  -191
  -193
  -196
  -198
  -200
  -203
  -205
  -207
  -209
  -210
  -212
Prev. year cash balance distribution, $m
  187
  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
  -111
  -133
  -136
  -138
  -140
  -142
  -144
  -146
  -148
  -150
  -152
  -154
  -156
  -158
  -159
  -161
  -163
  -164
  -165
  -167
  -168
  -169
  -170
  -170
  -171
  -171
  -172
  -172
  -171
  -171
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
  -107
  -122
  -118
  -113
  -108
  -103
  -97
  -91
  -85
  -79
  -72
  -66
  -59
  -53
  -47
  -41
  -35
  -30
  -25
  -21
  -17
  -14
  -11
  -9
  -7
  -5
  -4
  -3
  -2
  -1
Current shareholders' claim on cash, %
  50.0
  30.8
  19.0
  11.8
  7.3
  4.6
  2.9
  1.8
  1.1
  0.7
  0.5
  0.3
  0.2
  0.1
  0.1
  0.1
  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

Lexicon Pharmaceuticals, Inc. is a biopharmaceutical company. The Company focuses on the development and commercialization of breakthrough treatments for human disease. Its drug programs include XERMELO (telotristat ethyl), sotagliflozin, LX2761 and LX9211. It also has a number of additional compounds into various stages of clinical and preclinical development. XERMELO is an orally-delivered small molecule compound approved by the Food and Drug Administration (FDA) for the treatment of carcinoid syndrome diarrhea in combination with somatostatin analog (SSA) therapy in adults inadequately controlled by SSA therapy. It is developing sotagliflozin, an orally-delivered small molecule drug candidate, as a treatment for type 1 and type 2 diabetes mellitus. LX2761 is an orally-delivered small molecule compound that it is developing for the treatment of diabetes. LX9211 is an orally-delivered small molecule compound that the Company is developing for the treatment of neuropathic pain.

FINANCIAL RATIOS  of  Lexicon Pharmaceuticals, Inc. (LXRX)

Valuation Ratios
P/E Ratio -5.6
Price to Sales 9.6
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow -4.5
Price to Free Cash Flow -4.5
Growth Rates
Sales Growth Rate -36.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 22
Current Ratio 0
LT Debt to Equity 54.1%
Total Debt to Equity 64.3%
Interest Coverage -23
Management Effectiveness
Return On Assets -23.9%
Ret/ On Assets - 3 Yr. Avg. -16.7%
Return On Total Capital -43.6%
Ret/ On T. Cap. - 3 Yr. Avg. -26.4%
Return On Equity -63.7%
Return On Equity - 3 Yr. Avg. -36.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -160.2%
EBITDA Margin - 3 Yr. Avg. -192%
Operating Margin -165.1%
Oper. Margin - 3 Yr. Avg. -199.7%
Pre-Tax Margin -169.9%
Pre-Tax Margin - 3 Yr. Avg. -202.8%
Net Profit Margin -169.9%
Net Profit Margin - 3 Yr. Avg. -202.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

LXRX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LXRX stock intrinsic value calculation we used $90 million for the last fiscal year's total revenue generated by Lexicon Pharmaceuticals, Inc.. The default revenue input number comes from 0001 income statement of Lexicon 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 LXRX stock valuation model: a) initial revenue growth rate of 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 LXRX is calculated based on our internal credit rating of Lexicon 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 Lexicon 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 LXRX stock the variable cost ratio is equal to 55.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $178 million in the base year in the intrinsic value calculation for LXRX 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 Lexicon Pharmaceuticals, Inc..

Corporate tax rate of 27% is the nominal tax rate for Lexicon 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 LXRX 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 LXRX are equal to 74.6%.

Life of production assets of 34 years is the average useful life of capital assets used in Lexicon 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 LXRX is equal to -109.8%. 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 - $52.102 million for Lexicon 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 105.926 million for Lexicon 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 Lexicon Pharmaceuticals, Inc. at the current share price and the inputted number of shares is $0.8 billion.

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