Intrinsic value of Merus N.V. - MRUS

Previous Close

$12.83

  Intrinsic Value

$0.63

stock screener

  Rating & Target

str. sell

-95%

Previous close

$12.83

 
Intrinsic value

$0.63

 
Up/down potential

-95%

 
Rating

str. sell

We calculate the intrinsic value of MRUS 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 0.3

 

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
  26
  40
  59
  86
  121
  166
  223
  293
  378
  477
  592
  724
  873
  1,038
  1,221
  1,420
  1,636
  1,868
  2,115
  2,378
  2,656
  2,949
  3,256
  3,577
  3,913
  4,263
  4,628
  5,007
  5,402
  5,812
Variable operating expenses, $m
  72
  111
  166
  241
  341
  468
  629
  825
  1,062
  1,341
  1,666
  2,036
  2,455
  2,921
  3,434
  3,995
  4,601
  5,254
  5,950
  6,689
  7,471
  8,294
  9,158
  10,063
  11,007
  11,992
  13,018
  14,085
  15,195
  16,348
Fixed operating expenses, $m
  26
  26
  27
  27
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  35
  35
  36
  37
  38
  39
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
Total operating expenses, $m
  98
  137
  193
  268
  369
  496
  658
  855
  1,092
  1,372
  1,698
  2,068
  2,488
  2,955
  3,469
  4,030
  4,637
  5,291
  5,988
  6,728
  7,510
  8,334
  9,199
  10,105
  11,050
  12,036
  13,063
  14,131
  15,242
  16,396
Operating income, $m
  -72
  -98
  -134
  -183
  -247
  -330
  -434
  -562
  -715
  -896
  -1,105
  -1,345
  -1,615
  -1,916
  -2,248
  -2,610
  -3,002
  -3,423
  -3,873
  -4,350
  -4,855
  -5,386
  -5,944
  -6,528
  -7,137
  -7,773
  -8,435
  -9,124
  -9,840
  -10,585
EBITDA, $m
  -72
  -97
  -133
  -182
  -246
  -328
  -431
  -557
  -709
  -888
  -1,096
  -1,334
  -1,602
  -1,900
  -2,229
  -2,588
  -2,977
  -3,394
  -3,840
  -4,313
  -4,814
  -5,341
  -5,894
  -6,473
  -7,077
  -7,708
  -8,364
  -9,047
  -9,757
  -10,495
Interest expense (income), $m
  0
  0
  -7
  -5
  -3
  0
  4
  10
  16
  24
  34
  46
  59
  74
  92
  111
  132
  155
  180
  207
  236
  266
  298
  332
  368
  405
  444
  485
  527
  571
  617
Earnings before tax, $m
  -72
  -91
  -129
  -180
  -248
  -335
  -444
  -578
  -739
  -930
  -1,151
  -1,404
  -1,690
  -2,008
  -2,359
  -2,742
  -3,157
  -3,603
  -4,080
  -4,586
  -5,121
  -5,685
  -6,276
  -6,896
  -7,543
  -8,217
  -8,920
  -9,651
  -10,411
  -11,202
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
  -72
  -91
  -129
  -180
  -248
  -335
  -444
  -578
  -739
  -930
  -1,151
  -1,404
  -1,690
  -2,008
  -2,359
  -2,742
  -3,157
  -3,603
  -4,080
  -4,586
  -5,121
  -5,685
  -6,276
  -6,896
  -7,543
  -8,217
  -8,920
  -9,651
  -10,411
  -11,202

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
  61
  94
  141
  205
  289
  397
  533
  700
  901
  1,138
  1,413
  1,728
  2,083
  2,478
  2,914
  3,389
  3,904
  4,457
  5,048
  5,676
  6,339
  7,037
  7,770
  8,538
  9,339
  10,175
  11,045
  11,950
  12,892
  13,871
Adjusted assets (=assets-cash), $m
  61
  94
  141
  205
  289
  397
  533
  700
  901
  1,138
  1,413
  1,728
  2,083
  2,478
  2,914
  3,389
  3,904
  4,457
  5,048
  5,676
  6,339
  7,037
  7,770
  8,538
  9,339
  10,175
  11,045
  11,950
  12,892
  13,871
Revenue / Adjusted assets
  0.426
  0.426
  0.418
  0.420
  0.419
  0.418
  0.418
  0.419
  0.420
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
Average production assets, $m
  2
  3
  5
  7
  9
  13
  17
  23
  29
  37
  46
  56
  67
  80
  94
  109
  126
  144
  163
  183
  205
  227
  251
  275
  301
  328
  356
  386
  416
  448
Working capital, $m
  -27
  -42
  -64
  -92
  -130
  -179
  -240
  -315
  -405
  -512
  -636
  -778
  -937
  -1,115
  -1,311
  -1,525
  -1,757
  -2,006
  -2,272
  -2,554
  -2,853
  -3,167
  -3,497
  -3,842
  -4,203
  -4,579
  -4,970
  -5,378
  -5,801
  -6,242
Total debt, $m
  -124
  -94
  -52
  6
  81
  179
  301
  451
  632
  845
  1,093
  1,376
  1,696
  2,051
  2,443
  2,871
  3,335
  3,833
  4,364
  4,929
  5,526
  6,155
  6,814
  7,505
  8,226
  8,978
  9,762
  10,577
  11,424
  12,305
Total liabilities, $m
  55
  85
  127
  184
  260
  358
  480
  630
  811
  1,024
  1,272
  1,555
  1,874
  2,230
  2,622
  3,050
  3,514
  4,012
  4,543
  5,108
  5,705
  6,334
  6,993
  7,684
  8,405
  9,157
  9,940
  10,755
  11,603
  12,483
Total equity, $m
  6
  9
  14
  20
  29
  40
  53
  70
  90
  114
  141
  173
  208
  248
  291
  339
  390
  446
  505
  568
  634
  704
  777
  854
  934
  1,017
  1,104
  1,195
  1,289
  1,387
Total liabilities and equity, $m
  61
  94
  141
  204
  289
  398
  533
  700
  901
  1,138
  1,413
  1,728
  2,082
  2,478
  2,913
  3,389
  3,904
  4,458
  5,048
  5,676
  6,339
  7,038
  7,770
  8,538
  9,339
  10,174
  11,044
  11,950
  12,892
  13,870
Debt-to-equity ratio
  -20.260
  -9.940
  -3.660
  0.270
  2.810
  4.500
  5.650
  6.450
  7.020
  7.430
  7.740
  7.970
  8.140
  8.280
  8.390
  8.470
  8.540
  8.600
  8.650
  8.690
  8.720
  8.750
  8.770
  8.790
  8.810
  8.820
  8.840
  8.850
  8.860
  8.870
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
  -72
  -91
  -129
  -180
  -248
  -335
  -444
  -578
  -739
  -930
  -1,151
  -1,404
  -1,690
  -2,008
  -2,359
  -2,742
  -3,157
  -3,603
  -4,080
  -4,586
  -5,121
  -5,685
  -6,276
  -6,896
  -7,543
  -8,217
  -8,920
  -9,651
  -10,411
  -11,202
Depreciation, amort., depletion, $m
  0
  1
  1
  1
  2
  3
  3
  5
  6
  7
  9
  11
  13
  16
  19
  22
  25
  29
  33
  37
  41
  45
  50
  55
  60
  66
  71
  77
  83
  90
Funds from operations, $m
  -72
  -91
  -128
  -179
  -246
  -332
  -440
  -573
  -733
  -922
  -1,142
  -1,393
  -1,676
  -1,992
  -2,340
  -2,720
  -3,132
  -3,574
  -4,047
  -4,549
  -5,080
  -5,639
  -6,226
  -6,841
  -7,482
  -8,152
  -8,849
  -9,574
  -10,328
  -11,112
Change in working capital, $m
  -10
  -15
  -21
  -29
  -38
  -49
  -61
  -75
  -90
  -107
  -124
  -142
  -160
  -178
  -196
  -214
  -232
  -249
  -266
  -282
  -298
  -314
  -330
  -345
  -361
  -376
  -392
  -407
  -424
  -440
Cash from operations, $m
  -61
  -76
  -107
  -150
  -208
  -283
  -379
  -498
  -643
  -816
  -1,018
  -1,251
  -1,516
  -1,814
  -2,144
  -2,506
  -2,900
  -3,325
  -3,781
  -4,267
  -4,782
  -5,325
  -5,896
  -6,495
  -7,122
  -7,776
  -8,457
  -9,167
  -9,905
  -10,672
Maintenance CAPEX, $m
  0
  0
  -1
  -1
  -1
  -2
  -3
  -3
  -5
  -6
  -7
  -9
  -11
  -13
  -16
  -19
  -22
  -25
  -29
  -33
  -37
  -41
  -45
  -50
  -55
  -60
  -66
  -71
  -77
  -83
New CAPEX, $m
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
Cash from investing activities, $m
  -1
  -1
  -3
  -3
  -4
  -5
  -7
  -8
  -11
  -14
  -16
  -19
  -22
  -26
  -30
  -34
  -39
  -43
  -48
  -53
  -58
  -64
  -69
  -75
  -81
  -87
  -94
  -100
  -107
  -115
Free cash flow, $m
  -62
  -77
  -109
  -153
  -212
  -289
  -386
  -507
  -654
  -829
  -1,034
  -1,271
  -1,539
  -1,840
  -2,174
  -2,540
  -2,938
  -3,368
  -3,829
  -4,320
  -4,840
  -5,388
  -5,965
  -6,570
  -7,203
  -7,863
  -8,551
  -9,267
  -10,012
  -10,787
Issuance/(repayment) of debt, $m
  -124
  30
  42
  57
  76
  97
  122
  150
  181
  213
  248
  283
  319
  356
  392
  428
  463
  498
  532
  565
  597
  629
  660
  691
  721
  752
  783
  815
  847
  881
Issuance/(repurchase) of shares, $m
  219
  94
  134
  186
  256
  346
  457
  595
  759
  953
  1,178
  1,435
  1,725
  2,047
  2,402
  2,789
  3,208
  3,658
  4,139
  4,648
  5,187
  5,754
  6,350
  6,972
  7,623
  8,301
  9,007
  9,742
  10,506
  11,299
Cash from financing (excl. dividends), $m  
  95
  124
  176
  243
  332
  443
  579
  745
  940
  1,166
  1,426
  1,718
  2,044
  2,403
  2,794
  3,217
  3,671
  4,156
  4,671
  5,213
  5,784
  6,383
  7,010
  7,663
  8,344
  9,053
  9,790
  10,557
  11,353
  12,180
Total cash flow (excl. dividends), $m
  33
  47
  67
  91
  120
  154
  194
  238
  286
  338
  392
  448
  505
  563
  620
  677
  733
  788
  841
  894
  945
  995
  1,044
  1,093
  1,141
  1,190
  1,239
  1,290
  1,341
  1,394
Retained Cash Flow (-), $m
  -219
  -94
  -134
  -186
  -256
  -346
  -457
  -595
  -759
  -953
  -1,178
  -1,435
  -1,725
  -2,047
  -2,402
  -2,789
  -3,208
  -3,658
  -4,139
  -4,648
  -5,187
  -5,754
  -6,350
  -6,972
  -7,623
  -8,301
  -9,007
  -9,742
  -10,506
  -11,299
Prev. year cash balance distribution, $m
  198
  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
  12
  -47
  -67
  -96
  -136
  -191
  -264
  -357
  -473
  -616
  -787
  -987
  -1,220
  -1,484
  -1,782
  -2,112
  -2,475
  -2,870
  -3,297
  -3,755
  -4,243
  -4,760
  -5,306
  -5,880
  -6,481
  -7,111
  -7,768
  -8,452
  -9,165
  -9,906
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
  12
  -43
  -58
  -79
  -106
  -139
  -178
  -223
  -272
  -323
  -374
  -421
  -464
  -498
  -523
  -537
  -539
  -529
  -508
  -477
  -439
  -395
  -348
  -299
  -252
  -207
  -167
  -131
  -100
  -75
Current shareholders' claim on cash, %
  50.0
  12.4
  3.3
  0.9
  0.3
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Merus NV is a biotechnology company based in the Netherlands. The Company develops differentiating therapeutics for cancer patients. The product programs in the Merus pipeline are based on the Biclonics format. Its products inlcude, among others, MCLA-134 that is designed to bind to a combination of two immunomodulatory targets expressed by T cells, as wellas MCLA-145 that is designed to bind to a tumor-associated target with an immunomodulatory target involved in checkpoint inhibition.

FINANCIAL RATIOS  of  Merus N.V. (MRUS)

Valuation Ratios
P/E Ratio -3.7
Price to Sales 60.9
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow -6.8
Price to Free Cash Flow -6.5
Growth Rates
Sales Growth Rate 50%
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 0
LT Debt to Equity 2.8%
Total Debt to Equity 2.8%
Interest Coverage 0
Management Effectiveness
Return On Assets -88.5%
Ret/ On Assets - 3 Yr. Avg. -139.1%
Return On Total Capital -147.1%
Ret/ On T. Cap. - 3 Yr. Avg. -306.2%
Return On Equity -151.5%
Return On Equity - 3 Yr. Avg. -412%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -1666.7%
EBITDA Margin - 3 Yr. Avg. -1555.6%
Operating Margin -966.7%
Oper. Margin - 3 Yr. Avg. -1355.6%
Pre-Tax Margin -1666.7%
Pre-Tax Margin - 3 Yr. Avg. -1555.6%
Net Profit Margin -1666.7%
Net Profit Margin - 3 Yr. Avg. -1555.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

MRUS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MRUS stock intrinsic value calculation we used $16 million for the last fiscal year's total revenue generated by Merus N.V.. The default revenue input number comes from 0001 income statement of Merus N.V.. 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 MRUS 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 MRUS is calculated based on our internal credit rating of Merus N.V., 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 Merus N.V..
    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 MRUS stock the variable cost ratio is equal to 281.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $25 million in the base year in the intrinsic value calculation for MRUS 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 Merus N.V..

Corporate tax rate of 27% is the nominal tax rate for Merus N.V.. 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 MRUS 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 MRUS are equal to 7.7%.

Life of production assets of 3.7 years is the average useful life of capital assets used in Merus N.V. 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 MRUS is equal to -107.4%. 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 - $57.487394958 million for Merus N.V. - 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 22.751 million for Merus N.V. 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 Merus N.V. at the current share price and the inputted number of shares is $0.3 billion.

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