Intrinsic value of Neurocrine Biosciences, Inc. - NBIX

Previous Close

$83.92

  Intrinsic Value

$127.77

stock screener

  Rating & Target

str. buy

+52%

Previous close

$83.92

 
Intrinsic value

$127.77

 
Up/down potential

+52%

 
Rating

str. buy

We calculate the intrinsic value of NBIX 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 7.6

 

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, %
  39.10
  35.69
  32.62
  29.86
  27.37
  25.14
  23.12
  21.31
  19.68
  18.21
  16.89
  15.70
  14.63
  13.67
  12.80
  12.02
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.61
Revenue, $m
  627
  851
  1,129
  1,466
  1,867
  2,337
  2,877
  3,490
  4,177
  4,937
  5,771
  6,678
  7,655
  8,701
  9,814
  10,994
  12,239
  13,547
  14,917
  16,350
  17,846
  19,404
  21,026
  22,712
  24,466
  26,288
  28,182
  30,149
  32,195
  34,322
Variable operating expenses, $m
  263
  357
  473
  614
  782
  979
  1,205
  1,462
  1,750
  2,069
  2,418
  2,798
  3,207
  3,646
  4,112
  4,607
  5,128
  5,676
  6,250
  6,851
  7,477
  8,130
  8,810
  9,516
  10,251
  11,015
  11,808
  12,633
  13,490
  14,381
Fixed operating expenses, $m
  235
  240
  246
  251
  256
  262
  268
  274
  280
  286
  292
  299
  305
  312
  319
  326
  333
  340
  348
  355
  363
  371
  379
  388
  396
  405
  414
  423
  432
  442
Total operating expenses, $m
  498
  597
  719
  865
  1,038
  1,241
  1,473
  1,736
  2,030
  2,355
  2,710
  3,097
  3,512
  3,958
  4,431
  4,933
  5,461
  6,016
  6,598
  7,206
  7,840
  8,501
  9,189
  9,904
  10,647
  11,420
  12,222
  13,056
  13,922
  14,823
Operating income, $m
  129
  254
  410
  601
  828
  1,096
  1,404
  1,754
  2,147
  2,583
  3,061
  3,581
  4,142
  4,743
  5,383
  6,062
  6,778
  7,530
  8,319
  9,144
  10,005
  10,902
  11,837
  12,808
  13,818
  14,868
  15,960
  17,094
  18,273
  19,499
EBITDA, $m
  135
  262
  420
  614
  845
  1,116
  1,429
  1,785
  2,184
  2,627
  3,112
  3,641
  4,210
  4,821
  5,471
  6,160
  6,887
  7,651
  8,452
  9,290
  10,164
  11,076
  12,024
  13,011
  14,037
  15,103
  16,211
  17,363
  18,560
  19,806
Interest expense (income), $m
  0
  31
  33
  48
  68
  91
  118
  151
  188
  230
  277
  329
  387
  449
  516
  588
  664
  745
  831
  921
  1,015
  1,113
  1,216
  1,323
  1,435
  1,551
  1,671
  1,796
  1,926
  2,061
  2,202
Earnings before tax, $m
  98
  221
  362
  533
  738
  977
  1,253
  1,566
  1,917
  2,306
  2,732
  3,195
  3,693
  4,227
  4,796
  5,398
  6,032
  6,699
  7,398
  8,129
  8,892
  9,686
  10,513
  11,374
  12,268
  13,197
  14,163
  15,168
  16,211
  17,297
Tax expense, $m
  26
  60
  98
  144
  199
  264
  338
  423
  518
  623
  738
  863
  997
  1,141
  1,295
  1,457
  1,629
  1,809
  1,998
  2,195
  2,401
  2,615
  2,839
  3,071
  3,312
  3,563
  3,824
  4,095
  4,377
  4,670
Net income, $m
  72
  162
  264
  389
  539
  713
  915
  1,143
  1,400
  1,683
  1,994
  2,332
  2,696
  3,086
  3,501
  3,940
  4,404
  4,891
  5,401
  5,934
  6,491
  7,071
  7,675
  8,303
  8,956
  9,634
  10,339
  11,072
  11,834
  12,627

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
  591
  802
  1,064
  1,382
  1,760
  2,202
  2,712
  3,289
  3,937
  4,654
  5,440
  6,294
  7,214
  8,200
  9,250
  10,362
  11,535
  12,768
  14,060
  15,410
  16,820
  18,288
  19,817
  21,407
  23,059
  24,777
  26,561
  28,416
  30,344
  32,349
Adjusted assets (=assets-cash), $m
  591
  802
  1,064
  1,382
  1,760
  2,202
  2,712
  3,289
  3,937
  4,654
  5,440
  6,294
  7,214
  8,200
  9,250
  10,362
  11,535
  12,768
  14,060
  15,410
  16,820
  18,288
  19,817
  21,407
  23,059
  24,777
  26,561
  28,416
  30,344
  32,349
Revenue / Adjusted assets
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
  1.061
Average production assets, $m
  31
  43
  56
  73
  93
  117
  144
  175
  209
  247
  289
  334
  383
  435
  491
  550
  612
  677
  746
  818
  892
  970
  1,051
  1,136
  1,223
  1,314
  1,409
  1,507
  1,610
  1,716
Working capital, $m
  -9
  -13
  -17
  -22
  -28
  -35
  -43
  -52
  -63
  -74
  -87
  -100
  -115
  -131
  -147
  -165
  -184
  -203
  -224
  -245
  -268
  -291
  -315
  -341
  -367
  -394
  -423
  -452
  -483
  -515
Total debt, $m
  408
  598
  834
  1,120
  1,460
  1,858
  2,316
  2,837
  3,419
  4,064
  4,772
  5,540
  6,369
  7,257
  8,201
  9,202
  10,258
  11,367
  12,530
  13,745
  15,014
  16,336
  17,711
  19,142
  20,629
  22,175
  23,781
  25,451
  27,186
  28,990
Total liabilities, $m
  532
  722
  958
  1,244
  1,584
  1,982
  2,440
  2,960
  3,543
  4,188
  4,896
  5,664
  6,493
  7,380
  8,325
  9,326
  10,382
  11,491
  12,654
  13,869
  15,138
  16,459
  17,835
  19,266
  20,753
  22,299
  23,905
  25,574
  27,310
  29,114
Total equity, $m
  59
  80
  106
  138
  176
  220
  271
  329
  394
  465
  544
  629
  721
  820
  925
  1,036
  1,154
  1,277
  1,406
  1,541
  1,682
  1,829
  1,982
  2,141
  2,306
  2,478
  2,656
  2,842
  3,034
  3,235
Total liabilities and equity, $m
  591
  802
  1,064
  1,382
  1,760
  2,202
  2,711
  3,289
  3,937
  4,653
  5,440
  6,293
  7,214
  8,200
  9,250
  10,362
  11,536
  12,768
  14,060
  15,410
  16,820
  18,288
  19,817
  21,407
  23,059
  24,777
  26,561
  28,416
  30,344
  32,349
Debt-to-equity ratio
  6.900
  7.460
  7.840
  8.100
  8.300
  8.440
  8.540
  8.620
  8.690
  8.730
  8.770
  8.800
  8.830
  8.850
  8.870
  8.880
  8.890
  8.900
  8.910
  8.920
  8.930
  8.930
  8.940
  8.940
  8.950
  8.950
  8.950
  8.960
  8.960
  8.960
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
  162
  264
  389
  539
  713
  915
  1,143
  1,400
  1,683
  1,994
  2,332
  2,696
  3,086
  3,501
  3,940
  4,404
  4,891
  5,401
  5,934
  6,491
  7,071
  7,675
  8,303
  8,956
  9,634
  10,339
  11,072
  11,834
  12,627
Depreciation, amort., depletion, $m
  6
  8
  10
  13
  17
  21
  26
  31
  37
  44
  52
  60
  68
  78
  88
  98
  109
  121
  133
  146
  159
  173
  188
  203
  218
  235
  252
  269
  287
  306
Funds from operations, $m
  77
  169
  274
  402
  555
  734
  940
  1,175
  1,437
  1,727
  2,046
  2,392
  2,764
  3,164
  3,588
  4,038
  4,513
  5,012
  5,534
  6,080
  6,650
  7,244
  7,862
  8,505
  9,174
  9,869
  10,591
  11,342
  12,122
  12,933
Change in working capital, $m
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
Cash from operations, $m
  80
  172
  278
  407
  561
  741
  949
  1,184
  1,447
  1,739
  2,058
  2,405
  2,779
  3,179
  3,605
  4,056
  4,532
  5,031
  5,555
  6,102
  6,673
  7,268
  7,887
  8,531
  9,200
  9,896
  10,619
  11,371
  12,153
  12,965
Maintenance CAPEX, $m
  -4
  -6
  -8
  -10
  -13
  -17
  -21
  -26
  -31
  -37
  -44
  -52
  -60
  -68
  -78
  -88
  -98
  -109
  -121
  -133
  -146
  -159
  -173
  -188
  -203
  -218
  -235
  -252
  -269
  -287
New CAPEX, $m
  -9
  -11
  -14
  -17
  -20
  -23
  -27
  -31
  -34
  -38
  -42
  -45
  -49
  -52
  -56
  -59
  -62
  -65
  -69
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -98
  -102
  -106
Cash from investing activities, $m
  -13
  -17
  -22
  -27
  -33
  -40
  -48
  -57
  -65
  -75
  -86
  -97
  -109
  -120
  -134
  -147
  -160
  -174
  -190
  -205
  -221
  -237
  -254
  -272
  -291
  -309
  -330
  -350
  -371
  -393
Free cash flow, $m
  67
  156
  257
  381
  528
  701
  901
  1,127
  1,382
  1,663
  1,972
  2,308
  2,671
  3,059
  3,472
  3,909
  4,371
  4,856
  5,365
  5,897
  6,452
  7,030
  7,632
  8,259
  8,910
  9,587
  10,290
  11,021
  11,781
  12,571
Issuance/(repayment) of debt, $m
  20
  190
  236
  286
  340
  398
  458
  520
  583
  645
  707
  769
  829
  887
  945
  1,001
  1,056
  1,109
  1,163
  1,216
  1,268
  1,322
  1,376
  1,431
  1,487
  1,546
  1,606
  1,669
  1,735
  1,804
Issuance/(repurchase) of shares, $m
  75
  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  
  95
  190
  236
  286
  340
  398
  458
  520
  583
  645
  707
  769
  829
  887
  945
  1,001
  1,056
  1,109
  1,163
  1,216
  1,268
  1,322
  1,376
  1,431
  1,487
  1,546
  1,606
  1,669
  1,735
  1,804
Total cash flow (excl. dividends), $m
  162
  346
  493
  666
  869
  1,099
  1,359
  1,647
  1,964
  2,309
  2,680
  3,077
  3,499
  3,946
  4,417
  4,910
  5,427
  5,966
  6,528
  7,113
  7,720
  8,352
  9,008
  9,689
  10,397
  11,132
  11,896
  12,690
  13,516
  14,376
Retained Cash Flow (-), $m
  -147
  -21
  -26
  -32
  -38
  -44
  -51
  -58
  -65
  -72
  -79
  -85
  -92
  -99
  -105
  -111
  -117
  -123
  -129
  -135
  -141
  -147
  -153
  -159
  -165
  -172
  -178
  -185
  -193
  -200
Prev. year cash balance distribution, $m
  568
  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
  583
  325
  466
  635
  831
  1,055
  1,308
  1,590
  1,900
  2,237
  2,601
  2,992
  3,407
  3,847
  4,312
  4,799
  5,309
  5,843
  6,399
  6,977
  7,579
  8,205
  8,855
  9,531
  10,232
  10,961
  11,718
  12,505
  13,323
  14,175
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
  559
  297
  406
  523
  644
  766
  884
  994
  1,091
  1,173
  1,235
  1,277
  1,296
  1,292
  1,266
  1,220
  1,155
  1,076
  985
  887
  784
  681
  580
  485
  398
  320
  251
  193
  145
  107
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Neurocrine Biosciences, Inc. is engaged in discovering and developing pharmaceuticals, in diseases with unmet medical needs, through its research and development (R&D) platform, focused on neurological and endocrine based diseases and disorders. Its three lead late-stage clinical programs are elagolix, which is a gonadotropin-releasing hormone (GnRH) antagonist for endometriosis and uterine fibroids; INGREZZA (valbenazine), which is a vesicular monoamine transporter 2 (VMAT2) inhibitor, for the treatment of movement disorders, and opicapone, which is a selective catechol-O-methyltransferase inhibitor that is an adjunct therapy to preparations of levodopa/Dihydroxyphenylalanine (DOPA) decarboxylase inhibitors for adult patients with Parkinson's disease. Its product pipeline also includes NBI-640756, which targets tremor and NBI-74788, which targets classic congenital adrenal hyperplasia. Its R&D focus is on addressing diseases and disorders of the central nervous and endocrine systems.

FINANCIAL RATIOS  of  Neurocrine Biosciences, Inc. (NBIX)

Valuation Ratios
P/E Ratio -51.7
Price to Sales 486.1
Price to Book 23.1
Price to Tangible Book
Price to Cash Flow -68.8
Price to Free Cash Flow -66.3
Growth Rates
Sales Growth Rate -25%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 32%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -33.6%
Ret/ On Assets - 3 Yr. Avg. -29.7%
Return On Total Capital -38.2%
Ret/ On T. Cap. - 3 Yr. Avg. -34.5%
Return On Equity -38.2%
Return On Equity - 3 Yr. Avg. -34.5%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -933.3%
EBITDA Margin - 3 Yr. Avg. -457.8%
Operating Margin -980%
Oper. Margin - 3 Yr. Avg. -483.3%
Pre-Tax Margin -940%
Pre-Tax Margin - 3 Yr. Avg. -461.7%
Net Profit Margin -940%
Net Profit Margin - 3 Yr. Avg. -461.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

NBIX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NBIX stock intrinsic value calculation we used $451 million for the last fiscal year's total revenue generated by Neurocrine Biosciences, Inc.. The default revenue input number comes from 0001 income statement of Neurocrine Biosciences, 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 NBIX stock valuation model: a) initial revenue growth rate of 39.1% 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 NBIX is calculated based on our internal credit rating of Neurocrine Biosciences, 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 Neurocrine Biosciences, 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 NBIX stock the variable cost ratio is equal to 41.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $230 million in the base year in the intrinsic value calculation for NBIX 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 8.1% for Neurocrine Biosciences, Inc..

Corporate tax rate of 27% is the nominal tax rate for Neurocrine Biosciences, 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 NBIX 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 NBIX are equal to 5%.

Life of production assets of 5.6 years is the average useful life of capital assets used in Neurocrine Biosciences, 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 NBIX is equal to -1.5%. 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 - $480.765 million for Neurocrine Biosciences, 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 90.769 million for Neurocrine Biosciences, 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 Neurocrine Biosciences, Inc. at the current share price and the inputted number of shares is $7.6 billion.

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