Intrinsic value of NanoString Technologies - NSTG

Previous Close

$17.37

  Intrinsic Value

$0.34

stock screener

  Rating & Target

str. sell

-98%

Previous close

$17.37

 
Intrinsic value

$0.34

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of NSTG 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 0.5

 

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
  117
  120
  123
  126
  130
  134
  139
  144
  149
  155
  161
  168
  175
  182
  190
  198
  207
  216
  226
  237
  248
  259
  271
  284
  298
  312
  327
  343
  359
  377
Variable operating expenses, $m
  105
  107
  110
  113
  117
  120
  125
  129
  134
  139
  144
  150
  157
  163
  170
  178
  186
  194
  203
  212
  222
  232
  243
  255
  267
  280
  293
  307
  322
  338
Fixed operating expenses, $m
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
  80
  82
  84
  86
  88
  90
  92
  94
  96
  98
  100
Total operating expenses, $m
  158
  161
  166
  170
  175
  179
  186
  191
  197
  204
  210
  218
  226
  234
  242
  252
  261
  271
  282
  292
  304
  316
  329
  343
  357
  372
  387
  403
  420
  438
Operating income, $m
  -41
  -42
  -43
  -44
  -44
  -45
  -46
  -47
  -48
  -49
  -49
  -50
  -51
  -52
  -52
  -53
  -54
  -54
  -55
  -56
  -56
  -57
  -58
  -58
  -59
  -59
  -60
  -60
  -60
  -61
EBITDA, $m
  -38
  -39
  -40
  -41
  -41
  -42
  -43
  -44
  -44
  -45
  -46
  -46
  -47
  -47
  -48
  -49
  -49
  -49
  -50
  -50
  -51
  -51
  -51
  -52
  -52
  -52
  -52
  -52
  -52
  -52
Interest expense (income), $m
  4
  6
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  28
Earnings before tax, $m
  -47
  -47
  -48
  -49
  -50
  -52
  -53
  -54
  -55
  -57
  -58
  -59
  -61
  -62
  -64
  -65
  -66
  -68
  -70
  -71
  -73
  -74
  -76
  -78
  -80
  -81
  -83
  -85
  -87
  -89
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
  -47
  -47
  -48
  -49
  -50
  -52
  -53
  -54
  -55
  -57
  -58
  -59
  -61
  -62
  -64
  -65
  -66
  -68
  -70
  -71
  -73
  -74
  -76
  -78
  -80
  -81
  -83
  -85
  -87
  -89

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
  97
  99
  102
  104
  108
  111
  115
  119
  123
  128
  133
  139
  144
  150
  157
  164
  171
  179
  187
  195
  205
  214
  224
  235
  246
  258
  270
  283
  297
  311
Adjusted assets (=assets-cash), $m
  97
  99
  102
  104
  108
  111
  115
  119
  123
  128
  133
  139
  144
  150
  157
  164
  171
  179
  187
  195
  205
  214
  224
  235
  246
  258
  270
  283
  297
  311
Revenue / Adjusted assets
  1.206
  1.212
  1.206
  1.212
  1.204
  1.207
  1.209
  1.210
  1.211
  1.211
  1.211
  1.209
  1.215
  1.213
  1.210
  1.207
  1.211
  1.207
  1.209
  1.215
  1.210
  1.210
  1.210
  1.209
  1.211
  1.209
  1.211
  1.212
  1.209
  1.212
Average production assets, $m
  13
  14
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
  43
Working capital, $m
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  20
  21
  22
  24
  25
  26
  27
Total debt, $m
  39
  41
  44
  46
  49
  52
  56
  59
  63
  68
  72
  77
  82
  88
  93
  100
  106
  113
  120
  128
  136
  145
  154
  164
  174
  184
  195
  207
  219
  232
Total liabilities, $m
  87
  89
  91
  94
  97
  100
  103
  107
  111
  115
  120
  125
  130
  135
  141
  147
  154
  161
  168
  176
  184
  193
  202
  211
  221
  232
  243
  255
  267
  280
Total equity, $m
  10
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  20
  21
  22
  23
  25
  26
  27
  28
  30
  31
Total liabilities and equity, $m
  97
  99
  101
  104
  108
  111
  114
  119
  123
  128
  133
  139
  144
  150
  157
  163
  171
  179
  187
  196
  204
  214
  224
  234
  246
  258
  270
  283
  297
  311
Debt-to-equity ratio
  4.070
  4.180
  4.300
  4.430
  4.560
  4.700
  4.840
  4.990
  5.130
  5.270
  5.420
  5.560
  5.690
  5.830
  5.960
  6.090
  6.210
  6.330
  6.450
  6.560
  6.670
  6.770
  6.870
  6.970
  7.060
  7.150
  7.230
  7.310
  7.390
  7.470
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
  -47
  -47
  -48
  -49
  -50
  -52
  -53
  -54
  -55
  -57
  -58
  -59
  -61
  -62
  -64
  -65
  -66
  -68
  -70
  -71
  -73
  -74
  -76
  -78
  -80
  -81
  -83
  -85
  -87
  -89
Depreciation, amort., depletion, $m
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
Funds from operations, $m
  -45
  -44
  -45
  -46
  -47
  -48
  -50
  -51
  -52
  -53
  -54
  -55
  -57
  -58
  -59
  -60
  -62
  -63
  -64
  -66
  -67
  -69
  -70
  -71
  -73
  -74
  -76
  -77
  -79
  -80
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  -45
  -44
  -45
  -47
  -48
  -49
  -50
  -51
  -52
  -53
  -55
  -56
  -57
  -58
  -60
  -61
  -62
  -64
  -65
  -67
  -68
  -69
  -71
  -72
  -74
  -75
  -77
  -78
  -80
  -81
Maintenance CAPEX, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -9
  -9
  -9
  -10
  -10
Free cash flow, $m
  -48
  -47
  -49
  -50
  -51
  -52
  -54
  -55
  -56
  -58
  -59
  -60
  -62
  -63
  -65
  -66
  -68
  -70
  -71
  -73
  -75
  -76
  -78
  -80
  -82
  -84
  -86
  -88
  -90
  -92
Issuance/(repayment) of debt, $m
  -10
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
Issuance/(repurchase) of shares, $m
  59
  47
  48
  49
  51
  52
  53
  54
  56
  57
  58
  60
  61
  63
  64
  66
  67
  69
  70
  72
  74
  75
  77
  79
  81
  83
  84
  86
  88
  90
Cash from financing (excl. dividends), $m  
  49
  49
  50
  52
  54
  55
  56
  58
  60
  61
  63
  65
  66
  69
  70
  72
  74
  76
  77
  80
  82
  84
  86
  89
  91
  94
  95
  98
  100
  103
Total cash flow (excl. dividends), $m
  1
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  12
Retained Cash Flow (-), $m
  -59
  -47
  -48
  -49
  -51
  -52
  -53
  -54
  -56
  -57
  -58
  -60
  -61
  -63
  -64
  -66
  -67
  -69
  -70
  -72
  -74
  -75
  -77
  -79
  -81
  -83
  -84
  -86
  -88
  -90
Prev. year cash balance distribution, $m
  42
  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
  -15
  -45
  -46
  -47
  -48
  -49
  -50
  -51
  -52
  -53
  -54
  -56
  -57
  -58
  -59
  -60
  -61
  -63
  -64
  -65
  -66
  -68
  -69
  -70
  -72
  -73
  -74
  -76
  -77
  -79
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
  -15
  -41
  -40
  -39
  -37
  -36
  -34
  -32
  -30
  -28
  -26
  -24
  -22
  -19
  -17
  -15
  -13
  -12
  -10
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
Current shareholders' claim on cash, %
  50.0
  33.6
  22.6
  15.2
  10.2
  6.9
  4.7
  3.2
  2.2
  1.5
  1.0
  0.7
  0.5
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
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NanoString Technologies, Inc. develops, manufactures and sells intuitive products that unlock scientifically valuable and clinically actionable biologic information from minute amounts of tissue. The Company is engaged in the development, manufacture and commercialization of instruments, consumables and services for profiling the activity of hundreds of genes and proteins simultaneously from a single tissue sample. The Company's nCounter Analysis System is an automated, multi-application, digital detection and counting system, which directly profiles hundreds of molecules simultaneously using a barcoding technology. The Company markets systems and related consumables to researchers in academic, government and biopharmaceutical laboratories for use in understanding fundamental biology and the molecular basis of diseases, such as cancer, and to clinical laboratories and medical centers for diagnostic use.

FINANCIAL RATIOS  of  NanoString Technologies (NSTG)

Valuation Ratios
P/E Ratio -8
Price to Sales 4.3
Price to Book 31.2
Price to Tangible Book
Price to Cash Flow -62.3
Price to Free Cash Flow -37.4
Growth Rates
Sales Growth Rate 36.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 32%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 391.7%
Total Debt to Equity 391.7%
Interest Coverage -11
Management Effectiveness
Return On Assets -39.3%
Ret/ On Assets - 3 Yr. Avg. -46.6%
Return On Total Capital -78.3%
Ret/ On T. Cap. - 3 Yr. Avg. -75.5%
Return On Equity -293.8%
Return On Equity - 3 Yr. Avg. -189%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 65.1%
Gross Margin - 3 Yr. Avg. 59.3%
EBITDA Margin -46.5%
EBITDA Margin - 3 Yr. Avg. -67.9%
Operating Margin -48.8%
Oper. Margin - 3 Yr. Avg. -69.9%
Pre-Tax Margin -54.7%
Pre-Tax Margin - 3 Yr. Avg. -76.7%
Net Profit Margin -54.7%
Net Profit Margin - 3 Yr. Avg. -77.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -0.7%
Payout Ratio 0%

NSTG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NSTG stock intrinsic value calculation we used $114.905 million for the last fiscal year's total revenue generated by NanoString Technologies. The default revenue input number comes from 0001 income statement of NanoString Technologies. 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 NSTG 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 NSTG is calculated based on our internal credit rating of NanoString Technologies, 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 NanoString Technologies.
    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 NSTG stock the variable cost ratio is equal to 89.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $52 million in the base year in the intrinsic value calculation for NSTG 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 12.8% for NanoString Technologies.

Corporate tax rate of 27% is the nominal tax rate for NanoString Technologies. 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 NSTG 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 NSTG are equal to 11.4%.

Life of production assets of 3.9 years is the average useful life of capital assets used in NanoString Technologies 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 NSTG is equal to 7.2%. 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 - $40.109 million for NanoString Technologies - 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 29.751 million for NanoString Technologies 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 NanoString Technologies at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
TMO Thermo Fisher 241.27 199.97  hold
PKI PerkinElmer 86.99 108.15  buy
BIO Bio-Rad Labora 254.25 323.94  hold
TECH Bio-Techne 161.98 89.32  str.sell

COMPANY NEWS

▶ Should You Buy NanoString Technologies Inc (NSTG)?   [Dec-08-18 07:50PM  Insider Monkey]
▶ NanoString: 3Q Earnings Snapshot   [05:10PM  Associated Press]
▶ NanoString: 2Q Earnings Snapshot   [05:05PM  Associated Press]
▶ 5 Top Performing Stocks of the Best ETF of May   [May-31-18 11:10AM  Zacks]
▶ NanoString: 1Q Earnings Snapshot   [May-08-18 04:57PM  Associated Press]
▶ NanoString reports 4Q loss   [Mar-07-18 04:15PM  Associated Press]
▶ NanoString reports 3Q loss   [Nov-02-17 05:32PM  Associated Press]
▶ Is NanoString Technologies Inc (NSTG) Undervalued?   [Oct-31-17 04:45PM  Simply Wall St.]
▶ NanoString reports 2Q loss   [Aug-08-17 10:37PM  Associated Press]

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