Intrinsic value of Portola Pharmaceuticals - PTLA

Previous Close

$20.20

  Intrinsic Value

$1.29

stock screener

  Rating & Target

str. sell

-94%

Previous close

$20.20

 
Intrinsic value

$1.29

 
Up/down potential

-94%

 
Rating

str. sell

We calculate the intrinsic value of PTLA 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 1.3

 

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, %
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
Revenue, $m
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
  96
  101
  106
Variable operating expenses, $m
  41
  44
  46
  49
  52
  54
  57
  60
  64
  67
  70
  73
  77
  81
  85
  90
  95
  99
  105
  110
  116
  121
  128
  134
  141
  148
  155
  163
  172
  180
Fixed operating expenses, $m
  254
  260
  266
  272
  278
  284
  290
  296
  303
  310
  316
  323
  330
  338
  345
  353
  360
  368
  377
  385
  393
  402
  411
  420
  429
  438
  448
  458
  468
  478
Total operating expenses, $m
  295
  304
  312
  321
  330
  338
  347
  356
  367
  377
  386
  396
  407
  419
  430
  443
  455
  467
  482
  495
  509
  523
  539
  554
  570
  586
  603
  621
  640
  658
Operating income, $m
  -272
  -279
  -285
  -292
  -299
  -307
  -314
  -322
  -330
  -338
  -345
  -354
  -362
  -371
  -380
  -390
  -400
  -409
  -420
  -430
  -441
  -452
  -463
  -475
  -487
  -500
  -512
  -525
  -539
  -553
EBITDA, $m
  -270
  -276
  -283
  -289
  -296
  -304
  -311
  -318
  -326
  -334
  -342
  -350
  -359
  -368
  -377
  -386
  -395
  -405
  -415
  -425
  -436
  -447
  -458
  -469
  -481
  -493
  -506
  -518
  -532
  -545
Interest expense (income), $m
  0
  16
  8
  10
  12
  13
  15
  17
  19
  21
  23
  25
  27
  30
  32
  35
  38
  40
  43
  47
  50
  53
  57
  61
  65
  69
  73
  78
  83
  88
  93
Earnings before tax, $m
  -288
  -287
  -295
  -304
  -313
  -322
  -331
  -340
  -350
  -360
  -370
  -381
  -392
  -403
  -415
  -427
  -440
  -453
  -466
  -480
  -494
  -509
  -524
  -540
  -556
  -573
  -590
  -608
  -627
  -646
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
  -288
  -287
  -295
  -304
  -313
  -322
  -331
  -340
  -350
  -360
  -370
  -381
  -392
  -403
  -415
  -427
  -440
  -453
  -466
  -480
  -494
  -509
  -524
  -540
  -556
  -573
  -590
  -608
  -627
  -646

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
  196
  207
  219
  231
  244
  258
  272
  287
  302
  318
  335
  353
  371
  391
  411
  432
  455
  478
  503
  529
  556
  584
  614
  645
  678
  712
  748
  786
  825
  867
Adjusted assets (=assets-cash), $m
  196
  207
  219
  231
  244
  258
  272
  287
  302
  318
  335
  353
  371
  391
  411
  432
  455
  478
  503
  529
  556
  584
  614
  645
  678
  712
  748
  786
  825
  867
Revenue / Adjusted assets
  0.122
  0.121
  0.123
  0.121
  0.123
  0.120
  0.121
  0.122
  0.123
  0.123
  0.122
  0.122
  0.121
  0.123
  0.122
  0.123
  0.121
  0.121
  0.121
  0.121
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
Average production assets, $m
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  37
  39
Working capital, $m
  -68
  -72
  -77
  -81
  -85
  -90
  -95
  -100
  -106
  -111
  -117
  -123
  -130
  -137
  -144
  -151
  -159
  -167
  -176
  -185
  -194
  -204
  -215
  -226
  -237
  -249
  -262
  -275
  -289
  -303
Total debt, $m
  56
  66
  77
  88
  100
  112
  125
  138
  152
  166
  182
  198
  214
  232
  250
  269
  289
  310
  333
  356
  380
  406
  432
  460
  490
  521
  553
  587
  623
  660
Total liabilities, $m
  176
  186
  197
  208
  220
  232
  245
  258
  272
  286
  302
  318
  334
  352
  370
  389
  409
  430
  453
  476
  500
  526
  552
  580
  610
  641
  673
  707
  743
  780
Total equity, $m
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  43
  45
  48
  50
  53
  56
  58
  61
  64
  68
  71
  75
  79
  83
  87
Total liabilities and equity, $m
  196
  207
  219
  231
  244
  258
  272
  287
  302
  318
  336
  353
  371
  391
  411
  432
  454
  478
  503
  529
  556
  584
  613
  644
  678
  712
  748
  786
  826
  867
Debt-to-equity ratio
  2.870
  3.210
  3.520
  3.810
  4.090
  4.340
  4.590
  4.810
  5.030
  5.230
  5.420
  5.600
  5.770
  5.930
  6.080
  6.230
  6.360
  6.490
  6.610
  6.730
  6.840
  6.950
  7.040
  7.140
  7.230
  7.310
  7.400
  7.470
  7.550
  7.620
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
  -288
  -287
  -295
  -304
  -313
  -322
  -331
  -340
  -350
  -360
  -370
  -381
  -392
  -403
  -415
  -427
  -440
  -453
  -466
  -480
  -494
  -509
  -524
  -540
  -556
  -573
  -590
  -608
  -627
  -646
Depreciation, amort., depletion, $m
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Funds from operations, $m
  -285
  -284
  -293
  -301
  -310
  -319
  -328
  -337
  -347
  -357
  -367
  -378
  -389
  -400
  -412
  -423
  -436
  -449
  -462
  -475
  -489
  -504
  -519
  -534
  -550
  -567
  -584
  -601
  -620
  -638
Change in working capital, $m
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
Cash from operations, $m
  -281
  -280
  -288
  -297
  -305
  -314
  -323
  -332
  -341
  -351
  -361
  -372
  -382
  -393
  -404
  -416
  -428
  -440
  -453
  -466
  -480
  -494
  -508
  -523
  -539
  -555
  -571
  -588
  -606
  -624
Maintenance CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
New CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -9
Free cash flow, $m
  -283
  -283
  -291
  -299
  -308
  -317
  -326
  -335
  -345
  -355
  -365
  -375
  -386
  -397
  -409
  -421
  -433
  -446
  -459
  -472
  -486
  -500
  -515
  -530
  -546
  -562
  -579
  -597
  -615
  -633
Issuance/(repayment) of debt, $m
  -49
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
Issuance/(repurchase) of shares, $m
  343
  288
  297
  305
  314
  323
  332
  342
  352
  362
  372
  383
  394
  405
  417
  430
  442
  455
  469
  483
  497
  512
  527
  543
  560
  576
  594
  612
  631
  650
Cash from financing (excl. dividends), $m  
  294
  298
  308
  316
  326
  335
  345
  355
  366
  377
  387
  399
  411
  422
  435
  449
  462
  476
  491
  506
  521
  537
  554
  571
  589
  607
  626
  646
  667
  687
Total cash flow (excl. dividends), $m
  11
  16
  16
  17
  18
  19
  19
  20
  21
  22
  22
  23
  24
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  50
  52
  55
Retained Cash Flow (-), $m
  -343
  -288
  -297
  -305
  -314
  -323
  -332
  -342
  -352
  -362
  -372
  -383
  -394
  -405
  -417
  -430
  -442
  -455
  -469
  -483
  -497
  -512
  -527
  -543
  -560
  -576
  -594
  -612
  -631
  -650
Prev. year cash balance distribution, $m
  383
  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
  51
  -272
  -280
  -288
  -296
  -304
  -313
  -322
  -331
  -340
  -350
  -359
  -369
  -380
  -391
  -401
  -413
  -424
  -436
  -449
  -462
  -475
  -488
  -502
  -517
  -531
  -547
  -563
  -579
  -596
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
  49
  -249
  -244
  -237
  -230
  -221
  -211
  -201
  -190
  -178
  -166
  -153
  -140
  -128
  -115
  -102
  -90
  -78
  -67
  -57
  -48
  -39
  -32
  -26
  -20
  -16
  -12
  -9
  -6
  -4
Current shareholders' claim on cash, %
  50.0
  10.3
  2.2
  0.5
  0.1
  0.0
  0.0
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Portola Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on the development and commercialization of therapeutics in the areas of thrombosis, other hematologic disorders and inflammation for patients having limited or no approved treatment options. The Company's two lead programs, Betrixaban and Andexanet alfa, address unmet medical needs in the area of thrombosis, or blood clots. Its third product candidate is Cerdulatinib. The Company's Syk is a mediator of immune response in various types of immune cells. The Company has a program of selective Syk inhibitors, one of which is partnered with Ora Inc. Betrixaban is an oral once-daily inhibitor of Factor Xa in development for extended duration venous thromboembolism (VTE) prophylaxis in acute medically ill patients. Andexanet alfa is an orphan drug, which is a recombinant protein designed to reverse anticoagulant activity in patients treated with an fXa inhibitor.

FINANCIAL RATIOS  of  Portola Pharmaceuticals (PTLA)

Valuation Ratios
P/E Ratio -4.2
Price to Sales 31.7
Price to Book 6
Price to Tangible Book
Price to Cash Flow -5.8
Price to Free Cash Flow -5.8
Growth Rates
Sales Growth Rate 200%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 26.2%
Total Debt to Equity 26.2%
Interest Coverage 0
Management Effectiveness
Return On Assets -63.6%
Ret/ On Assets - 3 Yr. Avg. -49.9%
Return On Total Capital -80.5%
Ret/ On T. Cap. - 3 Yr. Avg. -60.6%
Return On Equity -87.1%
Return On Equity - 3 Yr. Avg. -62.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -738.9%
EBITDA Margin - 3 Yr. Avg. -1324.1%
Operating Margin -747.2%
Oper. Margin - 3 Yr. Avg. -1336.3%
Pre-Tax Margin -744.4%
Pre-Tax Margin - 3 Yr. Avg. -1335.4%
Net Profit Margin -747.2%
Net Profit Margin - 3 Yr. Avg. -1336.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PTLA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTLA stock intrinsic value calculation we used $22.546 million for the last fiscal year's total revenue generated by Portola Pharmaceuticals. The default revenue input number comes from 0001 income statement of Portola Pharmaceuticals. 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 PTLA stock valuation model: a) initial revenue growth rate of 5.9% 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 PTLA is calculated based on our internal credit rating of Portola Pharmaceuticals, 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 Portola Pharmaceuticals.
    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 PTLA stock the variable cost ratio is equal to 173.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $249 million in the base year in the intrinsic value calculation for PTLA 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 15% for Portola Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Portola Pharmaceuticals. 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 PTLA 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 PTLA are equal to 36.7%.

Life of production assets of 4.6 years is the average useful life of capital assets used in Portola Pharmaceuticals 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 PTLA is equal to -286.7%. 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 - $346.866 million for Portola Pharmaceuticals - 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 65.825 million for Portola Pharmaceuticals 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 Portola Pharmaceuticals at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Portola Pharmaceuticals: 3Q Earnings Snapshot   [06:26PM  Associated Press]
▶ Why Portola Pharmaceuticals Stock Shed 11% in September   [Oct-11-18 03:36PM  Motley Fool]
▶ Health Care Digest: Genentech's neuro legacy, uBiome's haul, plus saving moms   [Sep-24-18 11:10AM  American City Business Journals]
▶ 3 Top Biotech Stocks to Buy in September   [08:18AM  Motley Fool]
▶ Why Portola Pharmaceuticals Tumbled 18.3% Today   [Aug-09-18 05:08PM  Motley Fool]
▶ Portola Pharmaceuticals: 2Q Earnings Snapshot   [08:13AM  Associated Press]
▶ Portola Pharma's Q2 Earnings Outlook   [Aug-08-18 10:18AM  Benzinga]
▶ Is an Acquisition in Portola Pharmaceuticals' Future?   [Jun-05-18 09:31PM  Motley Fool]
▶ Portola Takes Another Big Step Forward   [May-14-18 06:36PM  Motley Fool]
▶ Portola Pharmaceuticals: 1Q Earnings Snapshot   [May-09-18 07:26PM  Associated Press]
▶ This Biotech Stock Could Be Like Buying Celgene in 2006   [May-05-18 08:31AM  Motley Fool]
▶ As emergency blood-thinner antidote scores FDA OK, Peninsula drug maker's stock soars   [May-04-18 05:35PM  American City Business Journals]
▶ 3 Growth Stocks for Forward-Looking Investors   [Mar-15-18 10:00AM  Motley Fool]

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