Intrinsic value of Xencor, Inc. - XNCR

Previous Close

$29.94

  Intrinsic Value

$2.26

stock screener

  Rating & Target

str. sell

-92%

Previous close

$29.94

 
Intrinsic value

$2.26

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of XNCR 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 1.7

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  42
  43
  44
  45
  46
  48
  50
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  93
  97
  101
  106
  111
  117
  122
  128
  134
Variable operating expenses, $m
  81
  82
  84
  87
  89
  92
  95
  99
  102
  106
  109
  114
  118
  123
  129
  134
  140
  147
  153
  160
  168
  176
  184
  193
  202
  211
  221
  232
  243
  255
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
  81
  82
  84
  87
  89
  92
  95
  99
  102
  106
  109
  114
  118
  123
  129
  134
  140
  147
  153
  160
  168
  176
  184
  193
  202
  211
  221
  232
  243
  255
Operating income, $m
  -39
  -40
  -41
  -42
  -43
  -44
  -46
  -47
  -49
  -51
  -52
  -54
  -56
  -58
  -61
  -64
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
EBITDA, $m
  -35
  -36
  -37
  -38
  -39
  -40
  -42
  -43
  -45
  -47
  -48
  -50
  -52
  -55
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -94
  -98
  -103
  -108
  -113
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
Earnings before tax, $m
  -39
  -40
  -41
  -42
  -43
  -45
  -46
  -48
  -50
  -52
  -53
  -55
  -57
  -60
  -63
  -65
  -69
  -72
  -75
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
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
  -39
  -40
  -41
  -42
  -43
  -45
  -46
  -48
  -50
  -52
  -53
  -55
  -57
  -60
  -63
  -65
  -69
  -72
  -75
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127

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
  343
  351
  360
  370
  381
  393
  407
  421
  437
  454
  472
  491
  511
  533
  556
  580
  606
  633
  662
  692
  724
  758
  794
  831
  871
  913
  957
  1,003
  1,051
  1,102
Adjusted assets (=assets-cash), $m
  343
  351
  360
  370
  381
  393
  407
  421
  437
  454
  472
  491
  511
  533
  556
  580
  606
  633
  662
  692
  724
  758
  794
  831
  871
  913
  957
  1,003
  1,051
  1,102
Revenue / Adjusted assets
  0.122
  0.123
  0.122
  0.122
  0.121
  0.122
  0.123
  0.121
  0.121
  0.121
  0.123
  0.122
  0.121
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.121
  0.122
  0.123
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
Average production assets, $m
  16
  16
  16
  17
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  48
  50
Working capital, $m
  -33
  -34
  -35
  -36
  -37
  -38
  -39
  -41
  -42
  -44
  -46
  -47
  -49
  -51
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -97
  -102
  -107
Total debt, $m
  1
  2
  4
  6
  7
  9
  12
  14
  17
  19
  22
  25
  29
  32
  36
  40
  44
  49
  53
  58
  64
  69
  75
  81
  88
  95
  102
  109
  117
  126
Total liabilities, $m
  56
  58
  59
  61
  62
  65
  67
  69
  72
  74
  77
  80
  84
  87
  91
  95
  99
  104
  109
  114
  119
  124
  130
  136
  143
  150
  157
  164
  172
  181
Total equity, $m
  287
  293
  301
  309
  319
  329
  340
  352
  365
  379
  394
  410
  427
  445
  465
  485
  506
  529
  553
  579
  606
  634
  664
  695
  728
  763
  800
  838
  879
  922
Total liabilities and equity, $m
  343
  351
  360
  370
  381
  394
  407
  421
  437
  453
  471
  490
  511
  532
  556
  580
  605
  633
  662
  693
  725
  758
  794
  831
  871
  913
  957
  1,002
  1,051
  1,103
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.020
  0.020
  0.030
  0.030
  0.040
  0.050
  0.050
  0.060
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.090
  0.100
  0.100
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.140
Adjusted equity ratio
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -39
  -40
  -41
  -42
  -43
  -45
  -46
  -48
  -50
  -52
  -53
  -55
  -57
  -60
  -63
  -65
  -69
  -72
  -75
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
Depreciation, amort., depletion, $m
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
Funds from operations, $m
  -35
  -36
  -37
  -38
  -39
  -41
  -42
  -44
  -46
  -47
  -49
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -71
  -74
  -77
  -81
  -85
  -89
  -94
  -98
  -103
  -108
  -114
  -119
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from operations, $m
  -35
  -35
  -36
  -37
  -38
  -40
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -114
Maintenance CAPEX, $m
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
New CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  -2
  -2
  -2
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
Free cash flow, $m
  -37
  -38
  -39
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -77
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -113
  -118
  -124
Issuance/(repayment) of debt, $m
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
  8
  8
Issuance/(repurchase) of shares, $m
  44
  46
  48
  50
  53
  55
  57
  60
  63
  66
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  109
  115
  121
  127
  133
  140
  147
  154
  162
  170
Cash from financing (excl. dividends), $m  
  45
  47
  49
  52
  55
  57
  59
  62
  66
  69
  71
  74
  77
  82
  86
  90
  94
  99
  104
  109
  114
  121
  127
  133
  139
  147
  154
  162
  170
  178
Total cash flow (excl. dividends), $m
  8
  10
  11
  12
  13
  14
  15
  17
  18
  19
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
Retained Cash Flow (-), $m
  -44
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -66
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -109
  -115
  -121
  -127
  -133
  -140
  -147
  -154
  -162
  -170
Prev. year cash balance distribution, $m
  241
  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
  205
  -37
  -38
  -38
  -40
  -41
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -116
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
  196
  -34
  -33
  -32
  -31
  -30
  -28
  -27
  -26
  -25
  -23
  -22
  -20
  -18
  -17
  -15
  -14
  -12
  -11
  -9
  -8
  -7
  -5
  -4
  -4
  -3
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  95.4
  90.8
  86.4
  82.2
  78.1
  74.1
  70.3
  66.7
  63.2
  59.9
  56.7
  53.7
  50.9
  48.2
  45.6
  43.1
  40.8
  38.6
  36.4
  34.4
  32.5
  30.7
  29.0
  27.4
  25.9
  24.4
  23.1
  21.8
  20.6
  19.4

Xencor, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on discovering and developing engineered monoclonal antibodies to treat severe and life threatening diseases. It has developed two clinical-stage product candidates, using its Immune Inhibitor Fc platform: XmAb5871, which is in two Phase II trials and is being developed for autoimmune disease, and XmAb7195, which is in a Phase I trial and is being developed for asthma and allergic diseases. It is also developing a pipeline of bispecific antibody candidates using its heterodimer Fc bispecific technology: XmAb14045, which is in a Phase I trial for the treatment of acute myeloid leukemia (AML); XmAb13676, which is in a Phase I trial for the treatment of B-cell malignancies; XmAb18087, which is in preclinical development for the treatment of neuroendocrine tumors, and XmAb20717, which is in preclinical development for the treatment of various cancers and is its dual checkpoint inhibitor.

FINANCIAL RATIOS  of  Xencor, Inc. (XNCR)

Valuation Ratios
P/E Ratio 58.1
Price to Sales 15.8
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 14.7
Price to Free Cash Flow 15.2
Growth Rates
Sales Growth Rate 214.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. -8.7%
Return On Total Capital 10.1%
Ret/ On T. Cap. - 3 Yr. Avg. -10.1%
Return On Equity 10.1%
Return On Equity - 3 Yr. Avg. -10.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 29.5%
EBITDA Margin - 3 Yr. Avg. -60.4%
Operating Margin 26.1%
Oper. Margin - 3 Yr. Avg. -66%
Pre-Tax Margin 28.4%
Pre-Tax Margin - 3 Yr. Avg. -65.3%
Net Profit Margin 27.3%
Net Profit Margin - 3 Yr. Avg. -65.7%
Effective Tax Rate 4%
Eff/ Tax Rate - 3 Yr. Avg. 1.3%
Payout Ratio 0%

XNCR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XNCR stock intrinsic value calculation we used $41 million for the last fiscal year's total revenue generated by Xencor, Inc.. The default revenue input number comes from 0001 income statement of Xencor, 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 XNCR stock valuation model: a) initial revenue growth rate of 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 XNCR is calculated based on our internal credit rating of Xencor, 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 Xencor, 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 XNCR stock the variable cost ratio is equal to 192.7%.

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 XNCR 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 Xencor, Inc..

Corporate tax rate of 27% is the nominal tax rate for Xencor, 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 XNCR 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 XNCR are equal to 37.1%.

Life of production assets of 6.5 years is the average useful life of capital assets used in Xencor, 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 XNCR is equal to -79.2%. 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 - $521.681 million for Xencor, 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 56.371 million for Xencor, 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 Xencor, Inc. at the current share price and the inputted number of shares is $1.7 billion.

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