Intrinsic value of Obalon Therapeutics - OBLN

Previous Close

$2.03

  Intrinsic Value

$0.49

stock screener

  Rating & Target

str. sell

-76%

Previous close

$2.03

 
Intrinsic value

$0.49

 
Up/down potential

-76%

 
Rating

str. sell

We calculate the intrinsic value of OBLN 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 0.0

 

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, %
  39.20
  35.78
  32.70
  29.93
  27.44
  25.19
  23.18
  21.36
  19.72
  18.25
  16.92
  15.73
  14.66
  13.69
  12.82
  12.04
  11.34
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
Revenue, $m
  14
  19
  25
  32
  41
  52
  63
  77
  92
  109
  128
  148
  169
  192
  217
  243
  271
  300
  330
  362
  395
  430
  466
  503
  542
  582
  624
  668
  713
  760
Variable operating expenses, $m
  46
  62
  82
  107
  136
  170
  210
  254
  304
  360
  421
  487
  559
  635
  716
  803
  894
  989
  1,090
  1,194
  1,304
  1,418
  1,536
  1,660
  1,788
  1,921
  2,060
  2,204
  2,354
  2,509
Fixed operating expenses, $m
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
Total operating expenses, $m
  58
  75
  95
  120
  149
  184
  224
  268
  319
  375
  436
  503
  575
  651
  733
  820
  911
  1,007
  1,108
  1,213
  1,323
  1,437
  1,556
  1,680
  1,809
  1,942
  2,082
  2,226
  2,377
  2,532
Operating income, $m
  -44
  -56
  -70
  -87
  -108
  -132
  -160
  -192
  -227
  -266
  -309
  -355
  -405
  -459
  -516
  -576
  -640
  -707
  -778
  -851
  -928
  -1,008
  -1,091
  -1,177
  -1,267
  -1,360
  -1,457
  -1,558
  -1,663
  -1,772
EBITDA, $m
  -44
  -55
  -69
  -87
  -107
  -131
  -159
  -190
  -225
  -264
  -306
  -352
  -402
  -455
  -512
  -571
  -635
  -701
  -771
  -844
  -920
  -999
  -1,081
  -1,167
  -1,256
  -1,348
  -1,445
  -1,544
  -1,648
  -1,756
Interest expense (income), $m
  1
  1
  1
  1
  2
  2
  3
  4
  5
  6
  7
  9
  10
  12
  13
  15
  17
  19
  22
  24
  27
  29
  32
  35
  38
  41
  44
  47
  50
  54
  58
Earnings before tax, $m
  -45
  -56
  -71
  -89
  -110
  -135
  -164
  -196
  -233
  -273
  -317
  -365
  -417
  -472
  -531
  -594
  -660
  -729
  -802
  -878
  -957
  -1,039
  -1,125
  -1,215
  -1,308
  -1,404
  -1,504
  -1,609
  -1,717
  -1,830
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
  -45
  -56
  -71
  -89
  -110
  -135
  -164
  -196
  -233
  -273
  -317
  -365
  -417
  -472
  -531
  -594
  -660
  -729
  -802
  -878
  -957
  -1,039
  -1,125
  -1,215
  -1,308
  -1,404
  -1,504
  -1,609
  -1,717
  -1,830

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
  23
  31
  42
  54
  69
  86
  106
  129
  155
  183
  214
  247
  284
  322
  364
  407
  454
  502
  553
  606
  662
  720
  780
  843
  908
  975
  1,046
  1,119
  1,195
  1,274
Adjusted assets (=assets-cash), $m
  23
  31
  42
  54
  69
  86
  106
  129
  155
  183
  214
  247
  284
  322
  364
  407
  454
  502
  553
  606
  662
  720
  780
  843
  908
  975
  1,046
  1,119
  1,195
  1,274
Revenue / Adjusted assets
  0.609
  0.613
  0.595
  0.593
  0.594
  0.605
  0.594
  0.597
  0.594
  0.596
  0.598
  0.599
  0.595
  0.596
  0.596
  0.597
  0.597
  0.598
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
Average production assets, $m
  1
  2
  3
  3
  4
  5
  7
  8
  10
  11
  13
  15
  17
  20
  22
  25
  28
  31
  34
  37
  41
  44
  48
  52
  56
  60
  64
  69
  73
  78
Working capital, $m
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -8
  -9
  -10
  -12
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -28
  -30
  -33
  -35
  -38
  -41
  -44
  -47
  -50
  -53
Total debt, $m
  15
  22
  31
  43
  56
  72
  90
  110
  133
  158
  186
  216
  249
  284
  321
  361
  402
  446
  492
  540
  590
  642
  696
  752
  811
  872
  935
  1,001
  1,069
  1,140
Total liabilities, $m
  21
  28
  37
  49
  62
  78
  96
  116
  139
  164
  192
  223
  255
  290
  327
  367
  408
  452
  498
  546
  596
  648
  702
  758
  817
  878
  941
  1,007
  1,075
  1,146
Total equity, $m
  2
  3
  4
  5
  7
  9
  11
  13
  15
  18
  21
  25
  28
  32
  36
  41
  45
  50
  55
  61
  66
  72
  78
  84
  91
  98
  105
  112
  119
  127
Total liabilities and equity, $m
  23
  31
  41
  54
  69
  87
  107
  129
  154
  182
  213
  248
  283
  322
  363
  408
  453
  502
  553
  607
  662
  720
  780
  842
  908
  976
  1,046
  1,119
  1,194
  1,273
Debt-to-equity ratio
  6.360
  7.050
  7.530
  7.870
  8.110
  8.290
  8.430
  8.530
  8.600
  8.670
  8.710
  8.750
  8.780
  8.810
  8.830
  8.850
  8.870
  8.880
  8.890
  8.900
  8.910
  8.920
  8.920
  8.930
  8.930
  8.940
  8.940
  8.950
  8.950
  8.950
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
  -45
  -56
  -71
  -89
  -110
  -135
  -164
  -196
  -233
  -273
  -317
  -365
  -417
  -472
  -531
  -594
  -660
  -729
  -802
  -878
  -957
  -1,039
  -1,125
  -1,215
  -1,308
  -1,404
  -1,504
  -1,609
  -1,717
  -1,830
Depreciation, amort., depletion, $m
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  6
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
Funds from operations, $m
  -44
  -56
  -71
  -88
  -110
  -134
  -163
  -195
  -231
  -271
  -315
  -362
  -413
  -468
  -527
  -589
  -654
  -723
  -795
  -870
  -949
  -1,031
  -1,116
  -1,204
  -1,296
  -1,392
  -1,492
  -1,595
  -1,702
  -1,814
Change in working capital, $m
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
Cash from operations, $m
  -44
  -56
  -70
  -88
  -109
  -133
  -162
  -194
  -230
  -270
  -313
  -361
  -412
  -467
  -525
  -587
  -652
  -721
  -793
  -868
  -946
  -1,028
  -1,113
  -1,202
  -1,294
  -1,389
  -1,489
  -1,592
  -1,699
  -1,811
Maintenance CAPEX, $m
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
New CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from investing activities, $m
  0
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -4
  -4
  -4
  -5
  -5
  -5
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -19
  -20
Free cash flow, $m
  -45
  -56
  -71
  -89
  -110
  -135
  -164
  -197
  -233
  -273
  -317
  -365
  -417
  -473
  -532
  -594
  -660
  -729
  -802
  -878
  -957
  -1,040
  -1,126
  -1,215
  -1,308
  -1,405
  -1,505
  -1,609
  -1,718
  -1,830
Issuance/(repayment) of debt, $m
  5
  7
  9
  11
  13
  16
  18
  20
  23
  25
  28
  30
  33
  35
  37
  39
  42
  44
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  68
  71
Issuance/(repurchase) of shares, $m
  46
  57
  72
  90
  112
  137
  166
  199
  235
  276
  320
  369
  421
  476
  535
  598
  664
  734
  807
  883
  962
  1,045
  1,131
  1,221
  1,314
  1,411
  1,511
  1,616
  1,725
  1,838
Cash from financing (excl. dividends), $m  
  51
  64
  81
  101
  125
  153
  184
  219
  258
  301
  348
  399
  454
  511
  572
  637
  706
  778
  853
  931
  1,012
  1,097
  1,185
  1,277
  1,373
  1,472
  1,574
  1,682
  1,793
  1,909
Total cash flow (excl. dividends), $m
  7
  8
  10
  12
  15
  17
  20
  23
  25
  28
  31
  33
  36
  39
  41
  43
  46
  48
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  75
  78
Retained Cash Flow (-), $m
  -46
  -57
  -72
  -90
  -112
  -137
  -166
  -199
  -235
  -276
  -320
  -369
  -421
  -476
  -535
  -598
  -664
  -734
  -807
  -883
  -962
  -1,045
  -1,131
  -1,221
  -1,314
  -1,411
  -1,511
  -1,616
  -1,725
  -1,838
Prev. year cash balance distribution, $m
  34
  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
  -49
  -62
  -78
  -97
  -120
  -146
  -176
  -210
  -248
  -290
  -335
  -385
  -438
  -494
  -555
  -619
  -686
  -756
  -830
  -907
  -988
  -1,072
  -1,159
  -1,249
  -1,344
  -1,442
  -1,543
  -1,649
  -1,759
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
  -45
  -54
  -64
  -75
  -87
  -99
  -110
  -121
  -130
  -138
  -143
  -146
  -147
  -145
  -141
  -135
  -126
  -116
  -105
  -94
  -82
  -70
  -59
  -49
  -39
  -31
  -24
  -18
  -13
Current shareholders' claim on cash, %
  1.6
  0.1
  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
  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

Obalon Therapeutics, Inc. is a United States-based commercial-stage medical device company focused on developing and commercializing medical devices to treat obese and overweight people by facilitating weight loss. The Company's product, Obalon balloon system, is a swallowable, gas-filled intragastric balloon designed to provide weight loss in obese patients. The Obalon balloon system is intended to be used as an adjunct to a moderate intensity diet and behavior modification program. All balloons must be removed six months after the first balloon is placed. The Obalon balloon system intends to provide patients and physicians with a reversible and repeatable weight loss solution in an outpatient setting, without altering patient anatomy or requiring surgery. The Company has received Premarket approval (PMA) for its Obalon balloon system based on the results of its United States pivotal clinical trial, referred to as the SMART trial.

FINANCIAL RATIOS  of  Obalon Therapeutics (OBLN)

Valuation Ratios
P/E Ratio -1.7
Price to Sales 11.3
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow -1.8
Price to Free Cash Flow -1.8
Growth Rates
Sales Growth Rate -25%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 15.6%
Total Debt to Equity 15.6%
Interest Coverage -19
Management Effectiveness
Return On Assets -40.9%
Ret/ On Assets - 3 Yr. Avg. -75.8%
Return On Total Capital -47.6%
Ret/ On T. Cap. - 3 Yr. Avg. -84.8%
Return On Equity -62.5%
Return On Equity - 3 Yr. Avg. -136.4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 33.3%
Gross Margin - 3 Yr. Avg. 36.1%
EBITDA Margin -633.3%
EBITDA Margin - 3 Yr. Avg. -427.8%
Operating Margin -666.7%
Oper. Margin - 3 Yr. Avg. -422.2%
Pre-Tax Margin -666.7%
Pre-Tax Margin - 3 Yr. Avg. -438.9%
Net Profit Margin -666.7%
Net Profit Margin - 3 Yr. Avg. -438.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

OBLN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OBLN stock intrinsic value calculation we used $9.914 million for the last fiscal year's total revenue generated by Obalon Therapeutics. The default revenue input number comes from 0001 income statement of Obalon Therapeutics. 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 OBLN stock valuation model: a) initial revenue growth rate of 39.2% 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 OBLN is calculated based on our internal credit rating of Obalon Therapeutics, 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 Obalon Therapeutics.
    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 OBLN stock the variable cost ratio is equal to 330%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12 million in the base year in the intrinsic value calculation for OBLN 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 5.4% for Obalon Therapeutics.

Corporate tax rate of 27% is the nominal tax rate for Obalon Therapeutics. 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 OBLN 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 OBLN are equal to 10.3%.

Life of production assets of 3.1 years is the average useful life of capital assets used in Obalon Therapeutics 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 OBLN is equal to -7%. 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 - $35.113 million for Obalon Therapeutics - 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 17.816 million for Obalon Therapeutics 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 Obalon Therapeutics at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Obalon Announces Upcoming Conference Presentations   [Nov-06-18 09:15AM  GlobeNewswire]
▶ FDA Grants PMA-S Approval for Obalon Touch Inflation System   [Sep-26-18 09:02AM  GlobeNewswire]
▶ These Biotech Stocks Are Moving Higher in August   [Aug-23-18 12:50PM  ACCESSWIRE]
▶ Obalon Announces Upcoming Conference Presentation   [Aug-07-18 09:02AM  GlobeNewswire]
▶ Obalon Announces Second Quarter 2018 Financial Results   [Aug-02-18 08:00AM  GlobeNewswire]
▶ Obalon Announces Upcoming Conference Presentation   [May-17-18 04:31PM  GlobeNewswire]
▶ Obalon Announces First Quarter 2018 Financial Results   [May-10-18 04:01PM  GlobeNewswire]

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