Intrinsic value of Invitae Corporation - NVTA

Previous Close

$24.19

  Intrinsic Value

$0.26

stock screener

  Rating & Target

str. sell

-99%

Previous close

$24.19

 
Intrinsic value

$0.26

 
Up/down potential

-99%

 
Rating

str. sell

We calculate the intrinsic value of NVTA 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 1.9

 

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
  237
  366
  547
  794
  1,120
  1,540
  2,067
  2,714
  3,492
  4,411
  5,477
  6,696
  8,072
  9,604
  11,292
  13,135
  15,131
  17,275
  19,565
  21,997
  24,568
  27,275
  30,116
  33,089
  36,195
  39,434
  42,807
  46,317
  49,966
  53,759
Variable operating expenses, $m
  235
  359
  533
  770
  1,083
  1,485
  1,991
  2,611
  3,358
  4,239
  5,254
  6,424
  7,743
  9,212
  10,832
  12,600
  14,515
  16,572
  18,768
  21,101
  23,567
  26,164
  28,889
  31,742
  34,721
  37,828
  41,064
  44,430
  47,931
  51,569
Fixed operating expenses, $m
  127
  130
  132
  135
  138
  141
  144
  148
  151
  154
  158
  161
  165
  168
  172
  176
  180
  183
  187
  192
  196
  200
  205
  209
  214
  218
  223
  228
  233
  238
Total operating expenses, $m
  362
  489
  665
  905
  1,221
  1,626
  2,135
  2,759
  3,509
  4,393
  5,412
  6,585
  7,908
  9,380
  11,004
  12,776
  14,695
  16,755
  18,955
  21,293
  23,763
  26,364
  29,094
  31,951
  34,935
  38,046
  41,287
  44,658
  48,164
  51,807
Operating income, $m
  -125
  -123
  -118
  -111
  -101
  -87
  -68
  -45
  -17
  17
  66
  112
  164
  223
  288
  359
  437
  520
  609
  704
  805
  911
  1,022
  1,139
  1,261
  1,388
  1,520
  1,658
  1,802
  1,951
EBITDA, $m
  -103
  -94
  -79
  -57
  -28
  10
  58
  119
  192
  279
  380
  496
  628
  775
  937
  1,114
  1,306
  1,512
  1,733
  1,968
  2,216
  2,477
  2,752
  3,039
  3,340
  3,653
  3,979
  4,319
  4,672
  5,039
Interest expense (income), $m
  0
  9
  17
  29
  46
  69
  99
  138
  187
  247
  319
  404
  503
  616
  743
  885
  1,042
  1,212
  1,397
  1,596
  1,808
  2,034
  2,272
  2,523
  2,786
  3,061
  3,349
  3,649
  3,962
  4,287
  4,625
Earnings before tax, $m
  -134
  -140
  -147
  -157
  -170
  -186
  -206
  -232
  -263
  -301
  -338
  -391
  -452
  -520
  -597
  -682
  -776
  -877
  -987
  -1,104
  -1,229
  -1,361
  -1,501
  -1,647
  -1,801
  -1,961
  -2,129
  -2,303
  -2,485
  -2,674
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
  -134
  -140
  -147
  -157
  -170
  -186
  -206
  -232
  -263
  -301
  -338
  -391
  -452
  -520
  -597
  -682
  -776
  -877
  -987
  -1,104
  -1,229
  -1,361
  -1,501
  -1,647
  -1,801
  -1,961
  -2,129
  -2,303
  -2,485
  -2,674

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
  297
  458
  686
  995
  1,404
  1,930
  2,590
  3,401
  4,376
  5,527
  6,864
  8,392
  10,115
  12,034
  14,150
  16,460
  18,961
  21,648
  24,518
  27,565
  30,787
  34,179
  37,739
  41,465
  45,358
  49,417
  53,643
  58,041
  62,614
  67,367
Adjusted assets (=assets-cash), $m
  297
  458
  686
  995
  1,404
  1,930
  2,590
  3,401
  4,376
  5,527
  6,864
  8,392
  10,115
  12,034
  14,150
  16,460
  18,961
  21,648
  24,518
  27,565
  30,787
  34,179
  37,739
  41,465
  45,358
  49,417
  53,643
  58,041
  62,614
  67,367
Revenue / Adjusted assets
  0.798
  0.799
  0.797
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
Average production assets, $m
  112
  172
  258
  374
  528
  725
  973
  1,278
  1,645
  2,078
  2,580
  3,154
  3,802
  4,523
  5,319
  6,187
  7,127
  8,137
  9,215
  10,361
  11,571
  12,846
  14,184
  15,585
  17,048
  18,574
  20,162
  21,815
  23,534
  25,320
Working capital, $m
  -1
  -2
  -3
  -5
  -7
  -9
  -12
  -16
  -21
  -26
  -33
  -40
  -48
  -58
  -68
  -79
  -91
  -104
  -117
  -132
  -147
  -164
  -181
  -199
  -217
  -237
  -257
  -278
  -300
  -323
Total debt, $m
  149
  253
  399
  598
  861
  1,199
  1,624
  2,145
  2,772
  3,513
  4,372
  5,354
  6,462
  7,697
  9,057
  10,543
  12,150
  13,878
  15,723
  17,683
  19,754
  21,935
  24,225
  26,621
  29,124
  31,733
  34,451
  37,279
  40,219
  43,275
Total liabilities, $m
  191
  295
  441
  640
  902
  1,241
  1,665
  2,187
  2,814
  3,554
  4,413
  5,396
  6,504
  7,738
  9,099
  10,584
  12,192
  13,920
  15,765
  17,724
  19,796
  21,977
  24,266
  26,662
  29,165
  31,775
  34,493
  37,321
  40,261
  43,317
Total equity, $m
  106
  164
  245
  355
  501
  689
  925
  1,214
  1,562
  1,973
  2,450
  2,996
  3,611
  4,296
  5,052
  5,876
  6,769
  7,728
  8,753
  9,841
  10,991
  12,202
  13,473
  14,803
  16,193
  17,642
  19,151
  20,721
  22,353
  24,050
Total liabilities and equity, $m
  297
  459
  686
  995
  1,403
  1,930
  2,590
  3,401
  4,376
  5,527
  6,863
  8,392
  10,115
  12,034
  14,151
  16,460
  18,961
  21,648
  24,518
  27,565
  30,787
  34,179
  37,739
  41,465
  45,358
  49,417
  53,644
  58,042
  62,614
  67,367
Debt-to-equity ratio
  1.410
  1.550
  1.630
  1.680
  1.720
  1.740
  1.760
  1.770
  1.770
  1.780
  1.780
  1.790
  1.790
  1.790
  1.790
  1.790
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
Adjusted equity ratio
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -134
  -140
  -147
  -157
  -170
  -186
  -206
  -232
  -263
  -301
  -338
  -391
  -452
  -520
  -597
  -682
  -776
  -877
  -987
  -1,104
  -1,229
  -1,361
  -1,501
  -1,647
  -1,801
  -1,961
  -2,129
  -2,303
  -2,485
  -2,674
Depreciation, amort., depletion, $m
  22
  29
  40
  54
  72
  97
  127
  164
  209
  261
  315
  385
  464
  552
  649
  754
  869
  992
  1,124
  1,263
  1,411
  1,567
  1,730
  1,901
  2,079
  2,265
  2,459
  2,660
  2,870
  3,088
Funds from operations, $m
  -112
  -111
  -108
  -103
  -97
  -89
  -79
  -68
  -55
  -40
  -24
  -6
  12
  31
  52
  72
  93
  115
  137
  160
  182
  206
  229
  253
  278
  304
  330
  357
  385
  414
Change in working capital, $m
  -1
  -1
  -1
  -1
  -2
  -3
  -3
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
Cash from operations, $m
  -112
  -110
  -107
  -102
  -95
  -87
  -76
  -64
  -50
  -34
  -17
  1
  20
  41
  62
  83
  105
  128
  151
  174
  198
  222
  246
  271
  297
  323
  350
  378
  407
  437
Maintenance CAPEX, $m
  -9
  -14
  -21
  -31
  -46
  -64
  -88
  -119
  -156
  -201
  -253
  -315
  -385
  -464
  -552
  -649
  -754
  -869
  -992
  -1,124
  -1,263
  -1,411
  -1,567
  -1,730
  -1,901
  -2,079
  -2,265
  -2,459
  -2,660
  -2,870
New CAPEX, $m
  -42
  -61
  -85
  -116
  -154
  -198
  -248
  -305
  -367
  -433
  -502
  -574
  -648
  -722
  -795
  -868
  -940
  -1,010
  -1,079
  -1,145
  -1,211
  -1,275
  -1,338
  -1,401
  -1,463
  -1,526
  -1,589
  -1,653
  -1,719
  -1,786
Cash from investing activities, $m
  -51
  -75
  -106
  -147
  -200
  -262
  -336
  -424
  -523
  -634
  -755
  -889
  -1,033
  -1,186
  -1,347
  -1,517
  -1,694
  -1,879
  -2,071
  -2,269
  -2,474
  -2,686
  -2,905
  -3,131
  -3,364
  -3,605
  -3,854
  -4,112
  -4,379
  -4,656
Free cash flow, $m
  -162
  -184
  -213
  -249
  -294
  -349
  -413
  -488
  -572
  -668
  -773
  -888
  -1,012
  -1,145
  -1,285
  -1,434
  -1,589
  -1,751
  -1,920
  -2,095
  -2,276
  -2,464
  -2,658
  -2,859
  -3,067
  -3,281
  -3,504
  -3,734
  -3,972
  -4,220
Issuance/(repayment) of debt, $m
  72
  104
  146
  199
  263
  338
  425
  521
  627
  740
  859
  982
  1,108
  1,234
  1,361
  1,485
  1,608
  1,728
  1,845
  1,960
  2,071
  2,181
  2,289
  2,396
  2,503
  2,610
  2,718
  2,828
  2,940
  3,056
Issuance/(repurchase) of shares, $m
  174
  198
  228
  267
  315
  373
  442
  521
  612
  712
  815
  936
  1,067
  1,206
  1,352
  1,507
  1,668
  1,836
  2,011
  2,192
  2,379
  2,572
  2,771
  2,978
  3,190
  3,410
  3,638
  3,874
  4,118
  4,371
Cash from financing (excl. dividends), $m  
  246
  302
  374
  466
  578
  711
  867
  1,042
  1,239
  1,452
  1,674
  1,918
  2,175
  2,440
  2,713
  2,992
  3,276
  3,564
  3,856
  4,152
  4,450
  4,753
  5,060
  5,374
  5,693
  6,020
  6,356
  6,702
  7,058
  7,427
Total cash flow (excl. dividends), $m
  83
  117
  161
  217
  284
  363
  454
  555
  666
  785
  902
  1,031
  1,163
  1,295
  1,428
  1,559
  1,687
  1,813
  1,936
  2,056
  2,174
  2,289
  2,402
  2,515
  2,626
  2,739
  2,852
  2,967
  3,086
  3,207
Retained Cash Flow (-), $m
  -174
  -198
  -228
  -267
  -315
  -373
  -442
  -521
  -612
  -712
  -815
  -936
  -1,067
  -1,206
  -1,352
  -1,507
  -1,668
  -1,836
  -2,011
  -2,192
  -2,379
  -2,572
  -2,771
  -2,978
  -3,190
  -3,410
  -3,638
  -3,874
  -4,118
  -4,371
Prev. year cash balance distribution, $m
  96
  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
  5
  -80
  -67
  -51
  -32
  -10
  12
  34
  55
  73
  86
  94
  96
  90
  75
  52
  19
  -23
  -75
  -136
  -205
  -283
  -369
  -463
  -564
  -672
  -786
  -906
  -1,032
  -1,164
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
  5
  -74
  -58
  -42
  -24
  -8
  8
  21
  31
  38
  41
  40
  36
  30
  22
  13
  4
  -4
  -12
  -17
  -21
  -23
  -24
  -24
  -22
  -20
  -17
  -14
  -11
  -9
Current shareholders' claim on cash, %
  79.2
  66.8
  58.6
  52.8
  48.5
  45.1
  42.4
  40.2
  38.2
  36.6
  35.1
  33.8
  32.7
  31.6
  30.6
  29.8
  28.9
  28.2
  27.5
  26.8
  26.1
  25.6
  25.0
  24.4
  23.9
  23.4
  23.0
  22.5
  22.1
  21.6

Invitae Corporation utilizes an integrated portfolio of laboratory processes, software tools and informatics capabilities to process deoxyribonucleic acid (DNA)-containing samples, analyze information about patient-specific genetic variation and generate test reports for clinicians and their patients. As of December 31, 2016, the Company's products consisted of assays totaling over 1,100 genes that could be used for multiple indications, including hereditary cancer, neurological disorders, cardiovascular disorders, pediatric disorders and other hereditary conditions. The Company offers panels for a range of hereditary conditions in cancer, cardiology, neuromuscular, pediatric and rare diseases. The Company focuses on genetic testing, genome network and genome management. The Company offers full gene sequencing and deletion/duplication analysis as a standard for all of its tests. The Company holds interests in AltaVoice, a patient-centered data company.

FINANCIAL RATIOS  of  Invitae Corporation (NVTA)

Valuation Ratios
P/E Ratio -10
Price to Sales 39.8
Price to Book 10.1
Price to Tangible Book
Price to Cash Flow -13.1
Price to Free Cash Flow -11.3
Growth Rates
Sales Growth Rate 212.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 19.1%
Financial Strength
Quick Ratio 19
Current Ratio 0
LT Debt to Equity 9.1%
Total Debt to Equity 14.1%
Interest Coverage 0
Management Effectiveness
Return On Assets -69.4%
Ret/ On Assets - 3 Yr. Avg. -61.3%
Return On Total Capital -76.6%
Ret/ On T. Cap. - 3 Yr. Avg. -65.7%
Return On Equity -84.4%
Return On Equity - 3 Yr. Avg. -70.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin -12%
Gross Margin - 3 Yr. Avg. -104%
EBITDA Margin -372%
EBITDA Margin - 3 Yr. Avg. -1228.2%
Operating Margin -400%
Oper. Margin - 3 Yr. Avg. -1291.7%
Pre-Tax Margin -400%
Pre-Tax Margin - 3 Yr. Avg. -1291.7%
Net Profit Margin -400%
Net Profit Margin - 3 Yr. Avg. -1291.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

NVTA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NVTA stock intrinsic value calculation we used $148 million for the last fiscal year's total revenue generated by Invitae Corporation. The default revenue input number comes from 0001 income statement of Invitae Corporation. 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 NVTA 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 NVTA is calculated based on our internal credit rating of Invitae Corporation, 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 Invitae Corporation.
    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 NVTA stock the variable cost ratio is equal to 101.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $124 million in the base year in the intrinsic value calculation for NVTA 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 11.5% for Invitae Corporation.

Corporate tax rate of 27% is the nominal tax rate for Invitae Corporation. 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 NVTA 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 NVTA are equal to 47.1%.

Life of production assets of 8.2 years is the average useful life of capital assets used in Invitae Corporation 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 NVTA is equal to -0.6%. 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 - $161.839 million for Invitae Corporation - 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 76.606 million for Invitae Corporation 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 Invitae Corporation at the current share price and the inputted number of shares is $1.9 billion.

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