Intrinsic value of Pacira Pharmaceuticals, Inc. - PCRX

Previous Close

$36.81

  Intrinsic Value

$67.44

stock screener

  Rating & Target

str. buy

+83%

Previous close

$36.81

 
Intrinsic value

$67.44

 
Up/down potential

+83%

 
Rating

str. buy

We calculate the intrinsic value of PCRX 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 1.5

 

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, %
  20.30
  18.77
  17.39
  16.15
  15.04
  14.03
  13.13
  12.32
  11.59
  10.93
  10.33
  9.80
  9.32
  8.89
  8.50
  8.15
  7.84
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
Revenue, $m
  405
  482
  565
  657
  755
  861
  974
  1,094
  1,221
  1,355
  1,495
  1,641
  1,794
  1,954
  2,120
  2,292
  2,472
  2,659
  2,853
  3,054
  3,264
  3,482
  3,708
  3,944
  4,189
  4,445
  4,711
  4,988
  5,278
  5,580
Variable operating expenses, $m
  87
  102
  118
  137
  156
  177
  200
  224
  249
  275
  297
  326
  356
  388
  421
  455
  491
  528
  567
  607
  648
  691
  736
  783
  832
  883
  936
  991
  1,048
  1,108
Fixed operating expenses, $m
  262
  267
  273
  279
  285
  292
  298
  305
  311
  318
  325
  332
  340
  347
  355
  363
  371
  379
  387
  396
  404
  413
  422
  432
  441
  451
  461
  471
  481
  492
Total operating expenses, $m
  349
  369
  391
  416
  441
  469
  498
  529
  560
  593
  622
  658
  696
  735
  776
  818
  862
  907
  954
  1,003
  1,052
  1,104
  1,158
  1,215
  1,273
  1,334
  1,397
  1,462
  1,529
  1,600
Operating income, $m
  57
  112
  174
  241
  314
  392
  477
  566
  661
  761
  873
  983
  1,098
  1,218
  1,344
  1,475
  1,611
  1,752
  1,899
  2,052
  2,211
  2,377
  2,550
  2,729
  2,916
  3,111
  3,315
  3,527
  3,748
  3,980
EBITDA, $m
  76
  134
  198
  268
  344
  426
  514
  608
  707
  811
  921
  1,036
  1,156
  1,282
  1,412
  1,549
  1,690
  1,838
  1,991
  2,151
  2,317
  2,490
  2,669
  2,857
  3,052
  3,255
  3,467
  3,688
  3,919
  4,160
Interest expense (income), $m
  4
  22
  25
  30
  37
  44
  51
  59
  67
  77
  86
  96
  107
  118
  129
  141
  154
  167
  180
  194
  209
  224
  240
  256
  273
  291
  310
  329
  349
  370
  392
Earnings before tax, $m
  35
  88
  143
  204
  270
  341
  418
  499
  585
  675
  776
  876
  980
  1,089
  1,203
  1,321
  1,444
  1,572
  1,705
  1,843
  1,987
  2,137
  2,293
  2,456
  2,625
  2,802
  2,986
  3,178
  3,379
  3,588
Tax expense, $m
  9
  24
  39
  55
  73
  92
  113
  135
  158
  182
  210
  237
  265
  294
  325
  357
  390
  424
  460
  498
  537
  577
  619
  663
  709
  756
  806
  858
  912
  969
Net income, $m
  25
  64
  105
  149
  197
  249
  305
  364
  427
  493
  567
  640
  716
  795
  878
  964
  1,054
  1,147
  1,244
  1,346
  1,451
  1,560
  1,674
  1,793
  1,916
  2,045
  2,180
  2,320
  2,466
  2,619

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
  441
  523
  614
  714
  821
  936
  1,059
  1,190
  1,327
  1,472
  1,625
  1,784
  1,950
  2,124
  2,304
  2,492
  2,687
  2,890
  3,101
  3,320
  3,548
  3,784
  4,031
  4,287
  4,554
  4,831
  5,121
  5,422
  5,737
  6,065
Adjusted assets (=assets-cash), $m
  441
  523
  614
  714
  821
  936
  1,059
  1,190
  1,327
  1,472
  1,625
  1,784
  1,950
  2,124
  2,304
  2,492
  2,687
  2,890
  3,101
  3,320
  3,548
  3,784
  4,031
  4,287
  4,554
  4,831
  5,121
  5,422
  5,737
  6,065
Revenue / Adjusted assets
  0.918
  0.922
  0.920
  0.920
  0.920
  0.920
  0.920
  0.919
  0.920
  0.921
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
Average production assets, $m
  165
  196
  230
  267
  307
  351
  397
  445
  497
  551
  608
  668
  730
  795
  863
  933
  1,006
  1,082
  1,161
  1,243
  1,328
  1,417
  1,509
  1,605
  1,705
  1,809
  1,917
  2,030
  2,148
  2,271
Working capital, $m
  41
  49
  57
  66
  76
  87
  98
  111
  123
  137
  151
  166
  181
  197
  214
  232
  250
  269
  288
  308
  330
  352
  375
  398
  423
  449
  476
  504
  533
  564
Total debt, $m
  320
  394
  476
  565
  662
  766
  876
  994
  1,118
  1,248
  1,385
  1,529
  1,678
  1,834
  1,997
  2,166
  2,341
  2,524
  2,714
  2,911
  3,116
  3,329
  3,551
  3,781
  4,021
  4,271
  4,532
  4,803
  5,086
  5,382
Total liabilities, $m
  397
  471
  553
  642
  739
  843
  953
  1,071
  1,195
  1,325
  1,462
  1,606
  1,755
  1,911
  2,074
  2,243
  2,418
  2,601
  2,791
  2,988
  3,193
  3,406
  3,628
  3,858
  4,098
  4,348
  4,609
  4,880
  5,163
  5,458
Total equity, $m
  44
  52
  61
  71
  82
  94
  106
  119
  133
  147
  162
  178
  195
  212
  230
  249
  269
  289
  310
  332
  355
  378
  403
  429
  455
  483
  512
  542
  574
  606
Total liabilities and equity, $m
  441
  523
  614
  713
  821
  937
  1,059
  1,190
  1,328
  1,472
  1,624
  1,784
  1,950
  2,123
  2,304
  2,492
  2,687
  2,890
  3,101
  3,320
  3,548
  3,784
  4,031
  4,287
  4,553
  4,831
  5,121
  5,422
  5,737
  6,064
Debt-to-equity ratio
  7.260
  7.530
  7.750
  7.920
  8.060
  8.180
  8.270
  8.350
  8.420
  8.480
  8.530
  8.570
  8.610
  8.640
  8.670
  8.690
  8.710
  8.730
  8.750
  8.770
  8.780
  8.800
  8.810
  8.820
  8.830
  8.840
  8.850
  8.860
  8.870
  8.870
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
  25
  64
  105
  149
  197
  249
  305
  364
  427
  493
  567
  640
  716
  795
  878
  964
  1,054
  1,147
  1,244
  1,346
  1,451
  1,560
  1,674
  1,793
  1,916
  2,045
  2,180
  2,320
  2,466
  2,619
Depreciation, amort., depletion, $m
  19
  22
  24
  27
  31
  34
  38
  42
  46
  50
  48
  53
  58
  63
  68
  74
  80
  86
  92
  99
  105
  112
  120
  127
  135
  144
  152
  161
  170
  180
Funds from operations, $m
  45
  86
  129
  176
  228
  283
  343
  406
  472
  543
  615
  693
  774
  858
  946
  1,038
  1,134
  1,233
  1,337
  1,444
  1,556
  1,673
  1,794
  1,920
  2,052
  2,189
  2,332
  2,481
  2,637
  2,800
Change in working capital, $m
  7
  8
  8
  9
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
Cash from operations, $m
  38
  78
  121
  167
  218
  273
  331
  393
  460
  529
  601
  678
  758
  842
  930
  1,021
  1,116
  1,214
  1,317
  1,424
  1,535
  1,651
  1,771
  1,896
  2,027
  2,163
  2,305
  2,453
  2,608
  2,769
Maintenance CAPEX, $m
  -11
  -13
  -16
  -18
  -21
  -24
  -28
  -31
  -35
  -39
  -44
  -48
  -53
  -58
  -63
  -68
  -74
  -80
  -86
  -92
  -99
  -105
  -112
  -120
  -127
  -135
  -144
  -152
  -161
  -170
New CAPEX, $m
  -28
  -31
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -54
  -57
  -60
  -62
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -104
  -108
  -113
  -118
  -123
Cash from investing activities, $m
  -39
  -44
  -50
  -55
  -61
  -67
  -74
  -80
  -87
  -93
  -101
  -108
  -115
  -123
  -131
  -138
  -147
  -156
  -165
  -174
  -184
  -194
  -204
  -216
  -227
  -239
  -252
  -265
  -279
  -293
Free cash flow, $m
  -1
  34
  71
  112
  156
  205
  257
  313
  373
  436
  500
  570
  643
  719
  799
  882
  968
  1,059
  1,152
  1,250
  1,351
  1,456
  1,566
  1,681
  1,800
  1,924
  2,053
  2,188
  2,329
  2,476
Issuance/(repayment) of debt, $m
  29
  74
  82
  89
  97
  104
  111
  117
  124
  131
  137
  143
  150
  156
  162
  169
  176
  183
  190
  197
  205
  213
  222
  231
  240
  250
  260
  271
  283
  295
Issuance/(repurchase) of shares, $m
  20
  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  
  49
  74
  82
  89
  97
  104
  111
  117
  124
  131
  137
  143
  150
  156
  162
  169
  176
  183
  190
  197
  205
  213
  222
  231
  240
  250
  260
  271
  283
  295
Total cash flow (excl. dividends), $m
  48
  108
  153
  201
  253
  309
  368
  431
  497
  566
  637
  713
  793
  875
  961
  1,051
  1,144
  1,241
  1,342
  1,447
  1,556
  1,670
  1,788
  1,911
  2,040
  2,174
  2,313
  2,459
  2,612
  2,771
Retained Cash Flow (-), $m
  -46
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
Prev. year cash balance distribution, $m
  323
  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
  325
  100
  144
  191
  242
  297
  356
  418
  483
  552
  622
  697
  776
  858
  943
  1,032
  1,125
  1,221
  1,321
  1,425
  1,533
  1,646
  1,763
  1,885
  2,013
  2,146
  2,284
  2,429
  2,580
  2,738
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
  312
  92
  125
  157
  188
  216
  240
  261
  277
  289
  295
  298
  295
  288
  277
  262
  245
  225
  203
  181
  159
  137
  116
  96
  78
  63
  49
  38
  28
  21
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

Pacira Pharmaceuticals, Inc. is a holding company. The Company is a pharmaceutical company focused on the development, manufacture and commercialization of pharmaceutical products, based on its DepoFoam extended release drug delivery technology, for use primarily in hospitals and ambulatory surgery centers. Its lead product candidate is EXPAREL (bupivacaine liposome injectable suspension), which consists of bupivacaine, an amide-type local anesthetic, encapsulated in DepoFoam and is indicated for single-dose infiltration into the surgical site to produce postsurgical analgesia. In addition to EXPAREL, DepoFoam is also the basis for its other Food and Drug Administration-approved commercial product, DepoCyt(e), which it manufactures for its commercial partners, as well as its product candidates. The Company's other product candidates include DepoMeloxicam (DepoMLX) and DepoTranexamic Acid (DepoTXA). DepoCyt(e) is indicated for the intrathecal treatment of lymphomatous meningitis.

FINANCIAL RATIOS  of  Pacira Pharmaceuticals, Inc. (PCRX)

Valuation Ratios
P/E Ratio -36.3
Price to Sales 5
Price to Book 6.3
Price to Tangible Book
Price to Cash Flow 41.8
Price to Free Cash Flow 172.5
Growth Rates
Sales Growth Rate 10.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -37.5%
Cap. Spend. - 3 Yr. Gr. Rate 15.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 49.8%
Total Debt to Equity 49.8%
Interest Coverage -9
Management Effectiveness
Return On Assets -8.7%
Ret/ On Assets - 3 Yr. Avg. -3.6%
Return On Total Capital -11.7%
Ret/ On T. Cap. - 3 Yr. Avg. -5.9%
Return On Equity -17.4%
Return On Equity - 3 Yr. Avg. -9.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 60.1%
Gross Margin - 3 Yr. Avg. 63.9%
EBITDA Margin -7.6%
EBITDA Margin - 3 Yr. Avg. -0.1%
Operating Margin -11.6%
Oper. Margin - 3 Yr. Avg. -3.5%
Pre-Tax Margin -13.8%
Pre-Tax Margin - 3 Yr. Avg. -6.7%
Net Profit Margin -13.8%
Net Profit Margin - 3 Yr. Avg. -6.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PCRX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PCRX stock intrinsic value calculation we used $337 million for the last fiscal year's total revenue generated by Pacira Pharmaceuticals, Inc.. The default revenue input number comes from 0001 income statement of Pacira Pharmaceuticals, 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 PCRX stock valuation model: a) initial revenue growth rate of 20.3% 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 PCRX is calculated based on our internal credit rating of Pacira Pharmaceuticals, 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 Pacira Pharmaceuticals, 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 PCRX stock the variable cost ratio is equal to 21.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $256 million in the base year in the intrinsic value calculation for PCRX 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 7.7% for Pacira Pharmaceuticals, Inc..

Corporate tax rate of 27% is the nominal tax rate for Pacira Pharmaceuticals, 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 PCRX 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 PCRX are equal to 40.7%.

Life of production assets of 12.6 years is the average useful life of capital assets used in Pacira Pharmaceuticals, 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 PCRX is equal to 10.1%. 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 - $321.226 million for Pacira Pharmaceuticals, 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 41.170 million for Pacira Pharmaceuticals, 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 Pacira Pharmaceuticals, Inc. at the current share price and the inputted number of shares is $1.5 billion.

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