Intrinsic value of Veracyte, Inc. - VCYT

Previous Close

$27.82

  Intrinsic Value

$13.62

stock screener

  Rating & Target

str. sell

-51%

Previous close

$27.82

 
Intrinsic value

$13.62

 
Up/down potential

-51%

 
Rating

str. sell

We calculate the intrinsic value of VCYT 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 1.1

 

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, %
  31.40
  28.76
  26.38
  24.25
  22.32
  20.59
  19.03
  17.63
  16.36
  15.23
  14.21
  13.28
  12.46
  11.71
  11.04
  10.44
  9.89
  9.40
  8.96
  8.57
  8.21
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.24
Revenue, $m
  121
  156
  197
  244
  299
  361
  429
  505
  587
  677
  773
  876
  985
  1,100
  1,222
  1,349
  1,482
  1,622
  1,767
  1,919
  2,076
  2,240
  2,410
  2,587
  2,771
  2,962
  3,160
  3,367
  3,582
  3,805
Variable operating expenses, $m
  94
  121
  153
  189
  231
  279
  331
  389
  453
  522
  594
  673
  757
  846
  939
  1,037
  1,140
  1,247
  1,359
  1,475
  1,596
  1,722
  1,853
  1,989
  2,130
  2,277
  2,430
  2,589
  2,754
  2,926
Fixed operating expenses, $m
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  59
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
Total operating expenses, $m
  137
  165
  198
  235
  278
  327
  380
  439
  504
  574
  647
  728
  813
  903
  997
  1,096
  1,201
  1,309
  1,423
  1,540
  1,662
  1,790
  1,922
  2,060
  2,202
  2,351
  2,506
  2,666
  2,833
  3,007
Operating income, $m
  -16
  -9
  -1
  9
  21
  34
  49
  65
  83
  103
  125
  148
  172
  197
  224
  252
  282
  313
  345
  379
  414
  450
  488
  527
  568
  611
  655
  701
  749
  799
EBITDA, $m
  -11
  -3
  7
  18
  31
  46
  63
  82
  102
  125
  149
  174
  202
  230
  261
  293
  327
  362
  398
  436
  476
  517
  560
  605
  652
  700
  750
  803
  857
  914
Interest expense (income), $m
  2
  2
  3
  4
  5
  7
  9
  11
  13
  16
  19
  22
  25
  28
  32
  36
  40
  44
  49
  53
  58
  63
  68
  74
  80
  86
  92
  98
  105
  112
  119
Earnings before tax, $m
  -18
  -12
  -5
  4
  14
  25
  38
  52
  68
  84
  104
  123
  144
  165
  188
  213
  238
  264
  292
  320
  350
  381
  414
  448
  483
  519
  557
  596
  637
  680
Tax expense, $m
  0
  0
  0
  1
  4
  7
  10
  14
  18
  23
  28
  33
  39
  45
  51
  57
  64
  71
  79
  87
  95
  103
  112
  121
  130
  140
  150
  161
  172
  184
Net income, $m
  -18
  -12
  -5
  3
  10
  18
  28
  38
  49
  62
  76
  90
  105
  121
  138
  155
  174
  193
  213
  234
  256
  278
  302
  327
  352
  379
  406
  435
  465
  496

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
  71
  91
  115
  143
  175
  211
  251
  295
  343
  395
  452
  511
  575
  643
  714
  788
  866
  947
  1,032
  1,121
  1,213
  1,308
  1,408
  1,511
  1,618
  1,730
  1,846
  1,967
  2,092
  2,223
Adjusted assets (=assets-cash), $m
  71
  91
  115
  143
  175
  211
  251
  295
  343
  395
  452
  511
  575
  643
  714
  788
  866
  947
  1,032
  1,121
  1,213
  1,308
  1,408
  1,511
  1,618
  1,730
  1,846
  1,967
  2,092
  2,223
Revenue / Adjusted assets
  1.704
  1.714
  1.713
  1.706
  1.709
  1.711
  1.709
  1.712
  1.711
  1.714
  1.710
  1.714
  1.713
  1.711
  1.711
  1.712
  1.711
  1.713
  1.712
  1.712
  1.711
  1.713
  1.712
  1.712
  1.713
  1.712
  1.712
  1.712
  1.712
  1.712
Average production assets, $m
  21
  27
  34
  43
  52
  63
  75
  88
  103
  118
  135
  153
  172
  193
  214
  236
  259
  284
  309
  336
  363
  392
  422
  453
  485
  518
  553
  589
  627
  666
Working capital, $m
  9
  11
  14
  18
  22
  26
  31
  36
  42
  49
  56
  63
  71
  79
  88
  97
  107
  117
  127
  138
  149
  161
  174
  186
  199
  213
  228
  242
  258
  274
Total debt, $m
  38
  53
  70
  91
  114
  141
  170
  202
  238
  276
  318
  362
  409
  458
  510
  565
  622
  682
  744
  809
  877
  947
  1,020
  1,096
  1,175
  1,257
  1,343
  1,431
  1,524
  1,620
Total liabilities, $m
  52
  67
  84
  105
  128
  155
  184
  217
  252
  291
  332
  376
  423
  472
  524
  579
  636
  696
  759
  824
  891
  962
  1,035
  1,111
  1,190
  1,272
  1,357
  1,446
  1,538
  1,634
Total equity, $m
  19
  24
  30
  38
  46
  56
  66
  78
  91
  105
  120
  136
  152
  170
  189
  209
  229
  251
  274
  297
  321
  347
  373
  400
  429
  458
  489
  521
  554
  589
Total liabilities and equity, $m
  71
  91
  114
  143
  174
  211
  250
  295
  343
  396
  452
  512
  575
  642
  713
  788
  865
  947
  1,033
  1,121
  1,212
  1,309
  1,408
  1,511
  1,619
  1,730
  1,846
  1,967
  2,092
  2,223
Debt-to-equity ratio
  2.010
  2.180
  2.310
  2.400
  2.470
  2.520
  2.560
  2.590
  2.620
  2.640
  2.650
  2.670
  2.680
  2.690
  2.700
  2.710
  2.710
  2.720
  2.720
  2.730
  2.730
  2.730
  2.740
  2.740
  2.740
  2.740
  2.740
  2.750
  2.750
  2.750
Adjusted equity ratio
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -18
  -12
  -5
  3
  10
  18
  28
  38
  49
  62
  76
  90
  105
  121
  138
  155
  174
  193
  213
  234
  256
  278
  302
  327
  352
  379
  406
  435
  465
  496
Depreciation, amort., depletion, $m
  5
  6
  7
  9
  10
  12
  14
  17
  19
  22
  23
  26
  30
  33
  37
  41
  45
  49
  53
  58
  63
  68
  73
  78
  84
  89
  95
  102
  108
  115
Funds from operations, $m
  -13
  -6
  2
  12
  20
  31
  42
  55
  68
  83
  99
  116
  135
  154
  174
  196
  218
  242
  266
  292
  318
  346
  375
  405
  436
  468
  502
  537
  573
  611
Change in working capital, $m
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
Cash from operations, $m
  -15
  -9
  0
  8
  17
  26
  37
  49
  62
  77
  92
  109
  127
  146
  166
  187
  209
  232
  256
  281
  307
  334
  363
  392
  423
  454
  488
  522
  558
  595
Maintenance CAPEX, $m
  -3
  -4
  -5
  -6
  -7
  -9
  -11
  -13
  -15
  -18
  -20
  -23
  -26
  -30
  -33
  -37
  -41
  -45
  -49
  -53
  -58
  -63
  -68
  -73
  -78
  -84
  -89
  -95
  -102
  -108
New CAPEX, $m
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
Cash from investing activities, $m
  -8
  -10
  -12
  -14
  -17
  -20
  -23
  -26
  -29
  -34
  -37
  -41
  -45
  -50
  -54
  -59
  -64
  -69
  -74
  -79
  -86
  -92
  -98
  -104
  -110
  -117
  -124
  -131
  -140
  -147
Free cash flow, $m
  -23
  -18
  -12
  -6
  0
  6
  14
  23
  33
  43
  55
  68
  81
  96
  111
  127
  145
  163
  181
  201
  222
  243
  265
  288
  312
  337
  363
  390
  419
  448
Issuance/(repayment) of debt, $m
  12
  15
  18
  20
  23
  26
  29
  32
  35
  38
  41
  44
  47
  50
  52
  55
  57
  60
  62
  65
  68
  70
  73
  76
  79
  82
  85
  89
  92
  96
Issuance/(repurchase) of shares, $m
  23
  18
  11
  5
  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  
  35
  33
  29
  25
  23
  26
  29
  32
  35
  38
  41
  44
  47
  50
  52
  55
  57
  60
  62
  65
  68
  70
  73
  76
  79
  82
  85
  89
  92
  96
Total cash flow (excl. dividends), $m
  11
  14
  16
  19
  23
  33
  44
  55
  68
  82
  96
  112
  128
  145
  163
  182
  202
  222
  244
  266
  289
  313
  338
  364
  391
  419
  449
  479
  511
  544
Retained Cash Flow (-), $m
  -23
  -18
  -11
  -7
  -8
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
Prev. year cash balance distribution, $m
  66
  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
  55
  -3
  5
  11
  15
  23
  33
  44
  55
  68
  81
  96
  111
  127
  145
  162
  181
  201
  221
  243
  265
  288
  312
  337
  363
  390
  418
  447
  478
  509
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
  52
  -3
  5
  9
  11
  17
  22
  27
  32
  36
  39
  41
  42
  43
  42
  41
  39
  37
  34
  31
  27
  24
  20
  17
  14
  11
  9
  7
  5
  4
Current shareholders' claim on cash, %
  86.2
  78.8
  75.3
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2
  74.2

Veracyte, Inc. is a genomic diagnostics company. The Company uses genomic technology to resolve diagnostic ambiguity. It targets diseases in which patients undergo invasive diagnostic procedures. Its products combine genomic technology, clinical science and machine learning. The Company commercializes over three genomic tests, which are transforming the diagnosis of thyroid cancer, lung cancer and idiopathic pulmonary fibrosis. The Company’s commercial solution, the Afirma Thyroid fine needle aspiration (FNA) Analysis, centers on the Afirma Gene Expression Classifier (GEC). The Afirma GEC is offered directly or as part of a solution that also includes cytopathology. The Company operates in the pulmonology diagnostics market. It offers Percepta Bronchial Genomic Classifier, a genomic test to resolve ambiguity in lung cancer diagnosis. It also offers the Envisia Genomic Classifier, which is designed to help in the assessment of patients suspected to have idiopathic pulmonary fibrosis.

FINANCIAL RATIOS  of  Veracyte, Inc. (VCYT)

Valuation Ratios
P/E Ratio -30.3
Price to Sales 14.4
Price to Book 15.7
Price to Tangible Book
Price to Cash Flow -33.5
Price to Free Cash Flow -29.4
Growth Rates
Sales Growth Rate 30%
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 32%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 43.3%
Total Debt to Equity 43.3%
Interest Coverage -15
Management Effectiveness
Return On Assets -33%
Ret/ On Assets - 3 Yr. Avg. -40.5%
Return On Total Capital -43.7%
Ret/ On T. Cap. - 3 Yr. Avg. -54.8%
Return On Equity -55.9%
Return On Equity - 3 Yr. Avg. -63.2%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 61.5%
Gross Margin - 3 Yr. Avg. 58.5%
EBITDA Margin -38.5%
EBITDA Margin - 3 Yr. Avg. -58.7%
Operating Margin -44.6%
Oper. Margin - 3 Yr. Avg. -62.3%
Pre-Tax Margin -47.7%
Pre-Tax Margin - 3 Yr. Avg. -64%
Net Profit Margin -47.7%
Net Profit Margin - 3 Yr. Avg. -64%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

VCYT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VCYT stock intrinsic value calculation we used $92 million for the last fiscal year's total revenue generated by Veracyte, Inc.. The default revenue input number comes from 0001 income statement of Veracyte, 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 VCYT stock valuation model: a) initial revenue growth rate of 31.4% 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 VCYT is calculated based on our internal credit rating of Veracyte, 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 Veracyte, 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 VCYT stock the variable cost ratio is equal to 78.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $42 million in the base year in the intrinsic value calculation for VCYT 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 7.8% for Veracyte, Inc..

Corporate tax rate of 27% is the nominal tax rate for Veracyte, 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 VCYT 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 VCYT are equal to 17.5%.

Life of production assets of 5.8 years is the average useful life of capital assets used in Veracyte, 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 VCYT is equal to 7.2%. 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 - $79.755 million for Veracyte, 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 41.109 million for Veracyte, 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 Veracyte, Inc. at the current share price and the inputted number of shares is $1.1 billion.

RELATED COMPANIES Price Int.Val. Rating
GHDX Genomic Health 54.84 109.47  buy
VRML Vermillion, In 0.990 0.01  str.sell
ILMN Illumina, Inc. 361.56 144.08  str.sell
QGEN Qiagen N.V. 40.71 19.26  str.sell
NTRA Natera, Inc. 25.32 0.10  str.sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.