Intrinsic value of Myriad Genetics, Inc. - MYGN

Previous Close

$23.52

  Intrinsic Value

$4.94

stock screener

  Rating & Target

str. sell

-79%

Previous close

$23.52

 
Intrinsic value

$4.94

 
Up/down potential

-79%

 
Rating

str. sell

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 1.7

 

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, %
  15.40
  14.36
  13.42
  12.58
  11.82
  11.14
  10.53
  9.97
  9.48
  9.03
  8.63
  8.26
  7.94
  7.64
  7.38
  7.14
  6.93
  6.73
  6.56
  6.40
  6.26
  6.14
  6.02
  5.92
  5.83
  5.75
  5.67
  5.60
  5.54
  5.49
Revenue, $m
  892
  1,020
  1,157
  1,303
  1,457
  1,619
  1,789
  1,968
  2,154
  2,349
  2,552
  2,762
  2,982
  3,210
  3,446
  3,692
  3,948
  4,214
  4,491
  4,778
  5,078
  5,389
  5,714
  6,052
  6,405
  6,773
  7,157
  7,558
  7,978
  8,416
Variable operating expenses, $m
  825
  932
  1,047
  1,169
  1,298
  1,434
  1,577
  1,726
  1,882
  2,045
  2,138
  2,315
  2,498
  2,689
  2,888
  3,094
  3,308
  3,531
  3,763
  4,004
  4,254
  4,515
  4,788
  5,071
  5,367
  5,675
  5,997
  6,333
  6,684
  7,051
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
  825
  932
  1,047
  1,169
  1,298
  1,434
  1,577
  1,726
  1,882
  2,045
  2,138
  2,315
  2,498
  2,689
  2,888
  3,094
  3,308
  3,531
  3,763
  4,004
  4,254
  4,515
  4,788
  5,071
  5,367
  5,675
  5,997
  6,333
  6,684
  7,051
Operating income, $m
  67
  88
  110
  134
  159
  185
  213
  242
  272
  303
  414
  448
  483
  520
  559
  599
  640
  683
  728
  775
  823
  874
  926
  981
  1,038
  1,098
  1,160
  1,225
  1,293
  1,364
EBITDA, $m
  178
  203
  231
  260
  290
  323
  357
  392
  429
  468
  508
  550
  594
  640
  687
  736
  787
  840
  895
  952
  1,012
  1,074
  1,139
  1,206
  1,276
  1,350
  1,426
  1,506
  1,590
  1,677
Interest expense (income), $m
  0
  1
  2
  5
  7
  9
  11
  14
  17
  20
  23
  26
  29
  32
  36
  40
  43
  47
  51
  56
  60
  65
  69
  74
  80
  85
  91
  96
  103
  109
  116
Earnings before tax, $m
  67
  86
  106
  127
  150
  174
  199
  225
  252
  281
  388
  419
  451
  484
  519
  555
  593
  632
  672
  715
  759
  804
  852
  902
  954
  1,008
  1,064
  1,123
  1,184
  1,249
Tax expense, $m
  18
  23
  29
  34
  40
  47
  54
  61
  68
  76
  105
  113
  122
  131
  140
  150
  160
  171
  182
  193
  205
  217
  230
  243
  257
  272
  287
  303
  320
  337
Net income, $m
  49
  62
  77
  93
  109
  127
  145
  164
  184
  205
  283
  306
  329
  354
  379
  405
  433
  461
  491
  522
  554
  587
  622
  658
  696
  736
  777
  820
  865
  912

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
  1,265
  1,447
  1,641
  1,848
  2,066
  2,296
  2,538
  2,791
  3,056
  3,332
  3,619
  3,918
  4,229
  4,553
  4,888
  5,238
  5,600
  5,978
  6,370
  6,778
  7,202
  7,644
  8,105
  8,585
  9,085
  9,607
  10,152
  10,721
  11,316
  11,937
Adjusted assets (=assets-cash), $m
  1,265
  1,447
  1,641
  1,848
  2,066
  2,296
  2,538
  2,791
  3,056
  3,332
  3,619
  3,918
  4,229
  4,553
  4,888
  5,238
  5,600
  5,978
  6,370
  6,778
  7,202
  7,644
  8,105
  8,585
  9,085
  9,607
  10,152
  10,721
  11,316
  11,937
Revenue / Adjusted assets
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
  0.705
Average production assets, $m
  510
  584
  662
  745
  833
  926
  1,024
  1,126
  1,232
  1,344
  1,459
  1,580
  1,705
  1,836
  1,971
  2,112
  2,258
  2,410
  2,569
  2,733
  2,904
  3,083
  3,268
  3,462
  3,664
  3,874
  4,094
  4,323
  4,563
  4,814
Working capital, $m
  52
  59
  67
  76
  84
  94
  104
  114
  125
  136
  148
  160
  173
  186
  200
  214
  229
  244
  260
  277
  295
  313
  331
  351
  371
  393
  415
  438
  463
  488
Total debt, $m
  42
  76
  114
  153
  195
  239
  285
  333
  384
  436
  491
  548
  608
  670
  734
  800
  870
  942
  1,017
  1,095
  1,176
  1,260
  1,348
  1,440
  1,535
  1,635
  1,739
  1,848
  1,961
  2,080
Total liabilities, $m
  242
  276
  313
  353
  395
  439
  485
  533
  584
  636
  691
  748
  808
  870
  934
  1,000
  1,070
  1,142
  1,217
  1,295
  1,376
  1,460
  1,548
  1,640
  1,735
  1,835
  1,939
  2,048
  2,161
  2,280
Total equity, $m
  1,024
  1,171
  1,328
  1,495
  1,672
  1,858
  2,053
  2,258
  2,472
  2,695
  2,928
  3,170
  3,421
  3,683
  3,955
  4,237
  4,531
  4,836
  5,153
  5,483
  5,827
  6,184
  6,557
  6,945
  7,350
  7,772
  8,213
  8,674
  9,154
  9,657
Total liabilities and equity, $m
  1,266
  1,447
  1,641
  1,848
  2,067
  2,297
  2,538
  2,791
  3,056
  3,331
  3,619
  3,918
  4,229
  4,553
  4,889
  5,237
  5,601
  5,978
  6,370
  6,778
  7,203
  7,644
  8,105
  8,585
  9,085
  9,607
  10,152
  10,722
  11,315
  11,937
Debt-to-equity ratio
  0.040
  0.070
  0.090
  0.100
  0.120
  0.130
  0.140
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.190
  0.190
  0.200
  0.200
  0.200
  0.200
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.210
  0.220
Adjusted equity ratio
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809
  0.809

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  49
  62
  77
  93
  109
  127
  145
  164
  184
  205
  283
  306
  329
  354
  379
  405
  433
  461
  491
  522
  554
  587
  622
  658
  696
  736
  777
  820
  865
  912
Depreciation, amort., depletion, $m
  111
  115
  120
  126
  132
  138
  144
  150
  157
  165
  95
  103
  111
  119
  128
  137
  147
  157
  167
  177
  189
  200
  212
  225
  238
  252
  266
  281
  296
  313
Funds from operations, $m
  159
  178
  198
  219
  241
  264
  289
  315
  342
  370
  378
  408
  440
  473
  507
  543
  579
  618
  658
  699
  742
  787
  834
  883
  934
  987
  1,043
  1,100
  1,161
  1,224
Change in working capital, $m
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
Cash from operations, $m
  152
  170
  190
  210
  232
  255
  279
  304
  331
  358
  366
  396
  427
  460
  493
  528
  565
  602
  642
  683
  725
  769
  815
  863
  913
  966
  1,020
  1,077
  1,137
  1,199
Maintenance CAPEX, $m
  -29
  -33
  -38
  -43
  -48
  -54
  -60
  -66
  -73
  -80
  -87
  -95
  -103
  -111
  -119
  -128
  -137
  -147
  -157
  -167
  -177
  -189
  -200
  -212
  -225
  -238
  -252
  -266
  -281
  -296
New CAPEX, $m
  -68
  -73
  -78
  -83
  -88
  -93
  -97
  -102
  -107
  -111
  -116
  -121
  -125
  -130
  -135
  -141
  -146
  -152
  -158
  -165
  -171
  -178
  -186
  -194
  -202
  -211
  -220
  -229
  -240
  -251
Cash from investing activities, $m
  -97
  -106
  -116
  -126
  -136
  -147
  -157
  -168
  -180
  -191
  -203
  -216
  -228
  -241
  -254
  -269
  -283
  -299
  -315
  -332
  -348
  -367
  -386
  -406
  -427
  -449
  -472
  -495
  -521
  -547
Free cash flow, $m
  56
  64
  73
  84
  95
  108
  121
  136
  151
  167
  163
  181
  199
  219
  239
  260
  281
  304
  327
  351
  376
  402
  430
  458
  487
  517
  549
  582
  616
  652
Issuance/(repayment) of debt, $m
  32
  35
  37
  39
  42
  44
  46
  48
  51
  53
  55
  57
  59
  62
  64
  67
  69
  72
  75
  78
  81
  84
  88
  92
  96
  100
  104
  109
  114
  119
Issuance/(repurchase) of shares, $m
  87
  85
  80
  74
  67
  60
  51
  41
  30
  18
  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  
  119
  120
  117
  113
  109
  104
  97
  89
  81
  71
  55
  57
  59
  62
  64
  67
  69
  72
  75
  78
  81
  84
  88
  92
  96
  100
  104
  109
  114
  119
Total cash flow (excl. dividends), $m
  176
  183
  190
  198
  205
  211
  218
  225
  231
  238
  218
  238
  259
  280
  303
  326
  350
  376
  402
  429
  457
  487
  517
  549
  582
  617
  653
  691
  730
  771
Retained Cash Flow (-), $m
  -136
  -147
  -157
  -167
  -177
  -186
  -196
  -205
  -214
  -223
  -233
  -242
  -252
  -262
  -272
  -282
  -294
  -305
  -317
  -330
  -343
  -358
  -373
  -388
  -405
  -422
  -441
  -460
  -481
  -503
Prev. year cash balance distribution, $m
  78
  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
  118
  36
  33
  31
  28
  25
  23
  20
  17
  15
  -15
  -4
  7
  19
  31
  44
  57
  71
  85
  99
  114
  129
  145
  161
  178
  195
  212
  230
  249
  268
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
  113
  33
  29
  25
  22
  18
  15
  12
  10
  8
  -7
  -2
  3
  6
  9
  11
  12
  13
  13
  13
  12
  11
  9
  8
  7
  6
  5
  4
  3
  2
Current shareholders' claim on cash, %
  94.8
  90.6
  87.3
  84.6
  82.5
  80.9
  79.7
  78.8
  78.3
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9
  77.9

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, Inc. (MYGN)

Valuation Ratios
P/E Ratio 73.1
Price to Sales 2.1
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 15.2
Price to Free Cash Flow 16.1
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 $773 million for the last fiscal year's total revenue generated by Myriad Genetics, Inc.. The default revenue input number comes from 0001 income statement of Myriad Genetics, 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 MYGN stock valuation model: a) initial revenue growth rate of 15.4% 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, 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 Myriad Genetics, 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 MYGN stock the variable cost ratio is equal to 93.8%.

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 5.9% for Myriad Genetics, Inc..

Corporate tax rate of 27% is the nominal tax rate for Myriad Genetics, 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 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 57.2%.

Life of production assets of 15.4 years is the average useful life of capital assets used in Myriad Genetics, 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 MYGN is equal to 5.8%. 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 - $966.1 million for Myriad Genetics, 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 73.403 million for Myriad Genetics, 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 Myriad Genetics, Inc. at the current share price and the inputted number of shares is $1.7 billion.

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