Intrinsic value of PTC Therapeutics, Inc. - PTCT

Previous Close

$36.94

  Intrinsic Value

$1.33

stock screener

  Rating & Target

str. sell

-96%

Previous close

$36.94

 
Intrinsic value

$1.33

 
Up/down potential

-96%

 
Rating

str. sell

We calculate the intrinsic value of PTCT 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 2.2

 

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, %
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
Revenue, $m
  293
  323
  353
  385
  419
  454
  490
  527
  566
  607
  649
  693
  739
  786
  836
  887
  941
  996
  1,055
  1,115
  1,179
  1,245
  1,314
  1,386
  1,462
  1,541
  1,623
  1,710
  1,800
  1,895
Variable operating expenses, $m
  382
  413
  444
  478
  512
  548
  586
  625
  665
  708
  673
  718
  766
  815
  866
  919
  975
  1,033
  1,093
  1,156
  1,222
  1,290
  1,362
  1,437
  1,515
  1,597
  1,682
  1,772
  1,866
  1,964
Fixed operating expenses, $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 operating expenses, $m
  382
  413
  444
  478
  512
  548
  586
  625
  665
  708
  673
  718
  766
  815
  866
  919
  975
  1,033
  1,093
  1,156
  1,222
  1,290
  1,362
  1,437
  1,515
  1,597
  1,682
  1,772
  1,866
  1,964
Operating income, $m
  -89
  -90
  -91
  -92
  -94
  -95
  -96
  -98
  -99
  -100
  -24
  -25
  -27
  -29
  -31
  -32
  -34
  -36
  -39
  -41
  -43
  -45
  -48
  -51
  -53
  -56
  -59
  -62
  -66
  -69
EBITDA, $m
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
Interest expense (income), $m
  5
  13
  20
  27
  34
  42
  50
  58
  67
  76
  85
  95
  105
  116
  127
  138
  150
  162
  175
  188
  202
  217
  232
  248
  265
  282
  300
  319
  339
  360
  381
Earnings before tax, $m
  -102
  -110
  -118
  -126
  -135
  -145
  -154
  -164
  -175
  -186
  -119
  -130
  -143
  -155
  -169
  -182
  -197
  -211
  -227
  -243
  -260
  -278
  -296
  -315
  -335
  -356
  -378
  -401
  -425
  -451
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
  -102
  -110
  -118
  -126
  -135
  -145
  -154
  -164
  -175
  -186
  -119
  -130
  -143
  -155
  -169
  -182
  -197
  -211
  -227
  -243
  -260
  -278
  -296
  -315
  -335
  -356
  -378
  -401
  -425
  -451

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
  1,158
  1,275
  1,396
  1,523
  1,655
  1,793
  1,936
  2,084
  2,239
  2,399
  2,566
  2,740
  2,920
  3,107
  3,303
  3,506
  3,718
  3,938
  4,168
  4,408
  4,659
  4,920
  5,193
  5,479
  5,777
  6,089
  6,415
  6,757
  7,115
  7,489
Adjusted assets (=assets-cash), $m
  1,158
  1,275
  1,396
  1,523
  1,655
  1,793
  1,936
  2,084
  2,239
  2,399
  2,566
  2,740
  2,920
  3,107
  3,303
  3,506
  3,718
  3,938
  4,168
  4,408
  4,659
  4,920
  5,193
  5,479
  5,777
  6,089
  6,415
  6,757
  7,115
  7,489
Revenue / Adjusted assets
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
Average production assets, $m
  265
  292
  319
  348
  379
  410
  443
  477
  512
  549
  587
  627
  668
  711
  755
  802
  850
  901
  953
  1,008
  1,065
  1,125
  1,188
  1,253
  1,321
  1,393
  1,467
  1,545
  1,627
  1,713
Working capital, $m
  -68
  -75
  -82
  -90
  -98
  -106
  -114
  -123
  -132
  -141
  -151
  -161
  -172
  -183
  -195
  -207
  -219
  -232
  -246
  -260
  -275
  -290
  -306
  -323
  -341
  -359
  -378
  -398
  -419
  -441
Total debt, $m
  234
  318
  406
  497
  593
  692
  796
  903
  1,015
  1,131
  1,252
  1,377
  1,507
  1,643
  1,784
  1,931
  2,084
  2,243
  2,410
  2,583
  2,764
  2,953
  3,151
  3,357
  3,573
  3,799
  4,035
  4,282
  4,540
  4,811
Total liabilities, $m
  838
  922
  1,010
  1,101
  1,197
  1,296
  1,400
  1,507
  1,619
  1,735
  1,855
  1,981
  2,111
  2,247
  2,388
  2,535
  2,688
  2,847
  3,014
  3,187
  3,368
  3,557
  3,755
  3,961
  4,177
  4,402
  4,638
  4,885
  5,144
  5,415
Total equity, $m
  321
  353
  387
  422
  459
  497
  536
  577
  620
  665
  711
  759
  809
  861
  915
  971
  1,030
  1,091
  1,155
  1,221
  1,290
  1,363
  1,438
  1,518
  1,600
  1,687
  1,777
  1,872
  1,971
  2,075
Total liabilities and equity, $m
  1,159
  1,275
  1,397
  1,523
  1,656
  1,793
  1,936
  2,084
  2,239
  2,400
  2,566
  2,740
  2,920
  3,108
  3,303
  3,506
  3,718
  3,938
  4,169
  4,408
  4,658
  4,920
  5,193
  5,479
  5,777
  6,089
  6,415
  6,757
  7,115
  7,490
Debt-to-equity ratio
  0.730
  0.900
  1.050
  1.180
  1.290
  1.390
  1.480
  1.560
  1.640
  1.700
  1.760
  1.810
  1.860
  1.910
  1.950
  1.990
  2.020
  2.060
  2.090
  2.120
  2.140
  2.170
  2.190
  2.210
  2.230
  2.250
  2.270
  2.290
  2.300
  2.320
Adjusted equity ratio
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -102
  -110
  -118
  -126
  -135
  -145
  -154
  -164
  -175
  -186
  -119
  -130
  -143
  -155
  -169
  -182
  -197
  -211
  -227
  -243
  -260
  -278
  -296
  -315
  -335
  -356
  -378
  -401
  -425
  -451
Depreciation, amort., depletion, $m
  93
  94
  96
  98
  99
  101
  103
  105
  107
  109
  33
  35
  37
  39
  42
  45
  47
  50
  53
  56
  59
  63
  66
  70
  73
  77
  82
  86
  90
  95
Funds from operations, $m
  -9
  -15
  -22
  -29
  -36
  -44
  -51
  -60
  -68
  -77
  -86
  -96
  -106
  -116
  -127
  -138
  -149
  -161
  -174
  -187
  -201
  -215
  -230
  -246
  -262
  -279
  -297
  -315
  -335
  -355
Change in working capital, $m
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
Cash from operations, $m
  -2
  -8
  -15
  -21
  -28
  -35
  -43
  -51
  -59
  -67
  -76
  -85
  -95
  -105
  -115
  -126
  -137
  -148
  -160
  -173
  -186
  -200
  -214
  -229
  -244
  -261
  -278
  -295
  -314
  -333
Maintenance CAPEX, $m
  -13
  -15
  -16
  -18
  -19
  -21
  -23
  -25
  -26
  -28
  -30
  -33
  -35
  -37
  -39
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -63
  -66
  -70
  -73
  -77
  -82
  -86
  -90
New CAPEX, $m
  -25
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
Cash from investing activities, $m
  -38
  -42
  -44
  -47
  -49
  -52
  -56
  -59
  -61
  -65
  -68
  -73
  -76
  -80
  -84
  -88
  -93
  -97
  -103
  -108
  -113
  -119
  -125
  -131
  -138
  -144
  -152
  -160
  -168
  -176
Free cash flow, $m
  -41
  -50
  -59
  -68
  -78
  -88
  -99
  -109
  -121
  -133
  -145
  -158
  -171
  -185
  -199
  -214
  -230
  -246
  -263
  -281
  -299
  -319
  -339
  -360
  -382
  -405
  -430
  -455
  -482
  -509
Issuance/(repayment) of debt, $m
  81
  84
  88
  92
  96
  99
  103
  107
  112
  116
  121
  125
  130
  136
  141
  147
  153
  159
  166
  173
  181
  189
  197
  206
  216
  226
  236
  247
  259
  271
Issuance/(repurchase) of shares, $m
  133
  142
  152
  162
  172
  183
  194
  206
  218
  230
  165
  178
  193
  207
  223
  239
  255
  273
  291
  310
  329
  350
  372
  394
  418
  443
  469
  496
  524
  554
Cash from financing (excl. dividends), $m  
  214
  226
  240
  254
  268
  282
  297
  313
  330
  346
  286
  303
  323
  343
  364
  386
  408
  432
  457
  483
  510
  539
  569
  600
  634
  669
  705
  743
  783
  825
Total cash flow (excl. dividends), $m
  172
  176
  181
  185
  190
  194
  199
  204
  209
  214
  141
  146
  152
  158
  165
  171
  178
  186
  194
  202
  211
  220
  230
  241
  252
  263
  275
  288
  301
  316
Retained Cash Flow (-), $m
  -133
  -142
  -152
  -162
  -172
  -183
  -194
  -206
  -218
  -230
  -165
  -178
  -193
  -207
  -223
  -239
  -255
  -273
  -291
  -310
  -329
  -350
  -372
  -394
  -418
  -443
  -469
  -496
  -524
  -554
Prev. year cash balance distribution, $m
  61
  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
  101
  34
  29
  24
  18
  11
  5
  -2
  -9
  -17
  -24
  -32
  -41
  -49
  -58
  -67
  -77
  -87
  -97
  -107
  -118
  -130
  -141
  -154
  -167
  -180
  -194
  -208
  -223
  -239
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
  96
  31
  25
  19
  14
  8
  3
  -1
  -5
  -9
  -12
  -14
  -15
  -17
  -17
  -17
  -17
  -16
  -15
  -14
  -12
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -2
  -2
Current shareholders' claim on cash, %
  93.1
  86.8
  81.2
  76.0
  71.3
  66.9
  62.9
  59.2
  55.8
  52.6
  50.6
  48.6
  46.7
  44.8
  43.0
  41.3
  39.6
  37.9
  36.4
  34.8
  33.4
  32.0
  30.6
  29.3
  28.0
  26.8
  25.7
  24.6
  23.5
  22.5

PTC Therapeutics, Inc. is a biopharmaceutical company. The Company is focused on the discovery, development and commercialization of medicines using its expertise in ribonucleic acid (RNA) biology. Its product pipeline includes Ataluren (Translarna), PTC596 and RG7916. Its product candidate, ataluren, is an orally administered small-molecule compound for the treatment of patients with genetic disorders due to a nonsense mutation. Ataluren is in clinical development for the treatment of Duchenne muscular dystrophy caused by a nonsense mutation (nmDMD) and cystic fibrosis caused by a nonsense mutation (nmCF). PTC596 is an orally active small molecule that targets tumor stem cell populations by reducing the function, activity and amount of BMI1. RG7916 is an investigational oral therapeutic, which is in two clinical studies: SUNFISH, a trial in childhood onset (Type II/III) spinal muscular atrophy (SMA) patients, and FIREFISH, a trial in infant onset (Type I) SMA patients.

FINANCIAL RATIOS  of  PTC Therapeutics, Inc. (PTCT)

Valuation Ratios
P/E Ratio -8.9
Price to Sales 15.2
Price to Book 10.5
Price to Tangible Book
Price to Cash Flow -12.1
Price to Free Cash Flow -11.9
Growth Rates
Sales Growth Rate 124.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 81.7%
Total Debt to Equity 81.7%
Interest Coverage -27
Management Effectiveness
Return On Assets -43.2%
Ret/ On Assets - 3 Yr. Avg. -43.6%
Return On Total Capital -53%
Ret/ On T. Cap. - 3 Yr. Avg. -50.5%
Return On Equity -82.1%
Return On Equity - 3 Yr. Avg. -63.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -161.4%
EBITDA Margin - 3 Yr. Avg. -332.3%
Operating Margin -159%
Oper. Margin - 3 Yr. Avg. -336.8%
Pre-Tax Margin -171.1%
Pre-Tax Margin - 3 Yr. Avg. -340.8%
Net Profit Margin -171.1%
Net Profit Margin - 3 Yr. Avg. -335.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 1.4%
Payout Ratio 0%

PTCT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTCT stock intrinsic value calculation we used $265 million for the last fiscal year's total revenue generated by PTC Therapeutics, Inc.. The default revenue input number comes from 0001 income statement of PTC Therapeutics, 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 PTCT stock valuation model: a) initial revenue growth rate of 10.6% 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 PTCT is calculated based on our internal credit rating of PTC Therapeutics, 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 PTC Therapeutics, 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 PTCT stock the variable cost ratio is equal to 133.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PTCT 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 8.4% for PTC Therapeutics, Inc..

Corporate tax rate of 27% is the nominal tax rate for PTC Therapeutics, 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 PTCT 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 PTCT are equal to 90.4%.

Life of production assets of 18 years is the average useful life of capital assets used in PTC Therapeutics, 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 PTCT is equal to -23.3%. 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 - $350.727 million for PTC Therapeutics, 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 58.368 million for PTC Therapeutics, 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 PTC Therapeutics, Inc. at the current share price and the inputted number of shares is $2.2 billion.

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