Intrinsic value of Myriad Genetics - MYGN

Previous Close

$31.00

  Intrinsic Value

$32.52

stock screener

  Rating & Target

hold

+5%

Previous close

$31.00

 
Intrinsic value

$32.52

 
Up/down potential

+5%

 
Rating

hold

We calculate the intrinsic value of MYGN 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 2.2

 

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
  787
  805
  826
  849
  875
  903
  934
  967
  1,003
  1,041
  1,082
  1,126
  1,173
  1,223
  1,275
  1,331
  1,391
  1,453
  1,519
  1,589
  1,663
  1,740
  1,822
  1,909
  1,999
  2,095
  2,196
  2,302
  2,413
  2,530
Variable operating expenses, $m
  611
  623
  637
  652
  670
  689
  709
  732
  756
  782
  729
  758
  790
  823
  859
  896
  936
  978
  1,023
  1,070
  1,119
  1,172
  1,227
  1,285
  1,346
  1,411
  1,478
  1,550
  1,625
  1,704
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
  611
  623
  637
  652
  670
  689
  709
  732
  756
  782
  729
  758
  790
  823
  859
  896
  936
  978
  1,023
  1,070
  1,119
  1,172
  1,227
  1,285
  1,346
  1,411
  1,478
  1,550
  1,625
  1,704
Operating income, $m
  176
  182
  189
  197
  205
  214
  224
  235
  247
  259
  354
  368
  383
  399
  417
  435
  454
  475
  496
  519
  543
  569
  595
  624
  653
  684
  717
  752
  788
  827
EBITDA, $m
  284
  290
  298
  306
  315
  325
  337
  349
  361
  375
  390
  406
  423
  441
  460
  480
  501
  524
  548
  573
  599
  627
  657
  688
  721
  755
  792
  830
  870
  912
Interest expense (income), $m
  0
  12
  13
  14
  16
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  43
  47
  51
  55
  60
  64
  69
  74
  80
  85
  91
  98
  104
  112
  119
  127
Earnings before tax, $m
  164
  169
  175
  181
  188
  195
  203
  212
  221
  231
  323
  334
  346
  359
  373
  388
  403
  420
  437
  455
  474
  494
  516
  538
  562
  587
  613
  640
  669
  700
Tax expense, $m
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  87
  90
  94
  97
  101
  105
  109
  113
  118
  123
  128
  133
  139
  145
  152
  158
  165
  173
  181
  189
Net income, $m
  120
  124
  128
  132
  137
  142
  148
  155
  161
  169
  236
  244
  253
  262
  272
  283
  294
  306
  319
  332
  346
  361
  376
  393
  410
  428
  447
  468
  489
  511

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
  1,249
  1,278
  1,310
  1,347
  1,388
  1,433
  1,482
  1,535
  1,592
  1,653
  1,718
  1,788
  1,862
  1,941
  2,025
  2,113
  2,207
  2,307
  2,411
  2,522
  2,639
  2,763
  2,892
  3,029
  3,174
  3,325
  3,485
  3,653
  3,830
  4,017
Adjusted assets (=assets-cash), $m
  1,249
  1,278
  1,310
  1,347
  1,388
  1,433
  1,482
  1,535
  1,592
  1,653
  1,718
  1,788
  1,862
  1,941
  2,025
  2,113
  2,207
  2,307
  2,411
  2,522
  2,639
  2,763
  2,892
  3,029
  3,174
  3,325
  3,485
  3,653
  3,830
  4,017
Revenue / Adjusted assets
  0.630
  0.630
  0.631
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
Average production assets, $m
  370
  378
  388
  399
  411
  424
  439
  454
  471
  489
  509
  529
  551
  575
  599
  626
  654
  683
  714
  747
  781
  818
  856
  897
  940
  985
  1,032
  1,082
  1,134
  1,189
Working capital, $m
  -52
  -53
  -54
  -56
  -58
  -60
  -62
  -64
  -66
  -69
  -71
  -74
  -77
  -81
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
Total debt, $m
  108
  118
  130
  143
  158
  175
  192
  212
  232
  254
  278
  304
  331
  359
  390
  422
  456
  492
  531
  571
  614
  658
  706
  756
  808
  863
  922
  983
  1,047
  1,115
Total liabilities, $m
  455
  465
  477
  490
  505
  522
  539
  559
  579
  602
  625
  651
  678
  706
  737
  769
  803
  840
  878
  918
  961
  1,006
  1,053
  1,103
  1,155
  1,210
  1,269
  1,330
  1,394
  1,462
Total equity, $m
  794
  813
  833
  857
  883
  911
  942
  976
  1,012
  1,051
  1,093
  1,137
  1,184
  1,234
  1,288
  1,344
  1,404
  1,467
  1,534
  1,604
  1,679
  1,757
  1,840
  1,927
  2,018
  2,115
  2,217
  2,324
  2,436
  2,555
Total liabilities and equity, $m
  1,249
  1,278
  1,310
  1,347
  1,388
  1,433
  1,481
  1,535
  1,591
  1,653
  1,718
  1,788
  1,862
  1,940
  2,025
  2,113
  2,207
  2,307
  2,412
  2,522
  2,640
  2,763
  2,893
  3,030
  3,173
  3,325
  3,486
  3,654
  3,830
  4,017
Debt-to-equity ratio
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.220
  0.230
  0.240
  0.250
  0.270
  0.280
  0.290
  0.300
  0.310
  0.330
  0.340
  0.350
  0.360
  0.370
  0.370
  0.380
  0.390
  0.400
  0.410
  0.420
  0.420
  0.430
  0.440
Adjusted equity ratio
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  120
  124
  128
  132
  137
  142
  148
  155
  161
  169
  236
  244
  253
  262
  272
  283
  294
  306
  319
  332
  346
  361
  376
  393
  410
  428
  447
  468
  489
  511
Depreciation, amort., depletion, $m
  107
  108
  109
  109
  110
  111
  112
  113
  115
  116
  37
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
  86
Funds from operations, $m
  227
  231
  236
  241
  247
  254
  261
  268
  276
  285
  272
  282
  293
  304
  316
  328
  341
  355
  370
  386
  402
  420
  438
  457
  478
  499
  522
  545
  570
  597
Change in working capital, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
Cash from operations, $m
  228
  233
  238
  243
  249
  256
  263
  270
  279
  287
  275
  285
  296
  307
  319
  332
  345
  360
  375
  390
  407
  425
  443
  463
  484
  505
  528
  552
  578
  604
Maintenance CAPEX, $m
  -26
  -27
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
New CAPEX, $m
  -7
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -38
  -41
  -43
  -45
  -47
  -50
  -52
  -55
Cash from investing activities, $m
  -33
  -36
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -52
  -54
  -58
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -89
  -93
  -97
  -103
  -108
  -113
  -118
  -124
  -130
  -137
Free cash flow, $m
  195
  198
  201
  204
  208
  213
  218
  223
  229
  235
  220
  228
  236
  244
  253
  262
  272
  283
  294
  306
  319
  332
  346
  361
  376
  393
  410
  428
  447
  468
Issuance/(repayment) of debt, $m
  8
  10
  12
  13
  15
  16
  18
  19
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  43
  45
  47
  50
  52
  55
  58
  61
  64
  68
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  
  8
  10
  12
  13
  15
  16
  18
  19
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  43
  45
  47
  50
  52
  55
  58
  61
  64
  68
Total cash flow (excl. dividends), $m
  203
  208
  213
  218
  223
  229
  235
  242
  250
  258
  244
  253
  263
  273
  283
  295
  307
  319
  333
  347
  361
  377
  393
  411
  429
  448
  468
  490
  512
  535
Retained Cash Flow (-), $m
  -16
  -18
  -21
  -23
  -26
  -29
  -31
  -34
  -36
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -67
  -70
  -74
  -78
  -83
  -87
  -92
  -97
  -102
  -107
  -113
  -118
Prev. year cash balance distribution, $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 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
  187
  190
  192
  194
  197
  201
  204
  209
  214
  219
  203
  209
  215
  223
  230
  238
  247
  256
  266
  276
  287
  299
  311
  324
  337
  352
  367
  383
  399
  417
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
  179
  174
  167
  160
  153
  146
  138
  130
  123
  115
  96
  89
  82
  75
  68
  61
  54
  47
  41
  35
  30
  25
  20
  16
  13
  10
  8
  6
  4
  3
Current shareholders' claim on cash, %
  100.0
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  100.0
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  100.0
  100.0
  100.0
  100.0
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  100.0
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  100.0
  100.0
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Myriad Genetics, Inc. is a molecular diagnostic company. The Company is engaged in the discovery, development and marketing of transformative molecular diagnostic tests. The Company operates through two segments: diagnostics and other. The diagnostics segment provides testing and collaborative development of testing that is designed to assess an individual's risk for developing disease later in life, identify a patient's likelihood of responding to drug therapy and guide a patient's dosing to enable optimal treatment, or assess a patient's risk of disease progression and disease recurrence. The other segment provides testing products and services to the pharmaceutical, biotechnology and medical research industries, research and development, and clinical services for patients, and also includes corporate services, such as finance, human resources, legal and information technology. Its molecular diagnostic tests include myRisk Hereditary Cancer, BRACAnalysis CDx and COLARIS.

FINANCIAL RATIOS  of  Myriad Genetics (MYGN)

Valuation Ratios
P/E Ratio 96.4
Price to Sales 2.8
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 20
Price to Free Cash Flow 21.2
Growth Rates
Sales Growth Rate 2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate -15.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 12.7%
Total Debt to Equity 12.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.1%
Ret/ On Assets - 3 Yr. Avg. 9.1%
Return On Total Capital 2.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10.7%
Return On Equity 2.9%
Return On Equity - 3 Yr. Avg. 10.7%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 77.8%
Gross Margin - 3 Yr. Avg. 78.9%
EBITDA Margin 11.8%
EBITDA Margin - 3 Yr. Avg. 20%
Operating Margin 6.4%
Oper. Margin - 3 Yr. Avg. 15.7%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. 15.6%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 10.2%
Effective Tax Rate 48.8%
Eff/ Tax Rate - 3 Yr. Avg. 38.5%
Payout Ratio 0%

MYGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MYGN stock intrinsic value calculation we used $771.4 million for the last fiscal year's total revenue generated by Myriad Genetics. The default revenue input number comes from 0001 income statement of Myriad Genetics. 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 MYGN 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 MYGN is calculated based on our internal credit rating of Myriad Genetics, 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 Myriad Genetics.
    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 MYGN stock the variable cost ratio is equal to 77.8%.

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 MYGN 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 12.1% for Myriad Genetics.

Corporate tax rate of 27% is the nominal tax rate for Myriad Genetics. 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 MYGN 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 MYGN are equal to 47%.

Life of production assets of 13.9 years is the average useful life of capital assets used in Myriad Genetics 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 MYGN is equal to -6.6%. 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 - $778.2 million for Myriad Genetics - 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 69.907 million for Myriad Genetics 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 Myriad Genetics at the current share price and the inputted number of shares is $2.2 billion.

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