RE:RE:RE:earnings multipleOne problem, there are only 51M shares not 54M.
Also using this, most pharmas in this sector are trading at 12 to 12 times and getting buyouts at 13-14 times.
d_trump wrote: No, if you are using EBITDA to value the company then you have to deduct the debt from the total value to arrive at the equity value.. Either that or use EBTDA (EBITDA less interest expense). Equity value + debt = enterprise value. That's how all M&A is done.
adamchess wrote: If EBITDA is greater than $10 a share and multiple is 7.75 as you say, isn't the price then simple $77.50? USD of course. If it was $25 USD why would others have paid $65 USD?
d_trump wrote: why does everyone keep saying this is trading at 3 or 4 times earnings? If you are using EBITDA as your measure of earnings (as opposed to EPS), then you have to deduct debt from the P x E value because EBITDA excludes interest cost. Assuming $600M USD EBITDA , the current multiple is 7.75 times:
600US x 7.75 = $4,650 less 3,300 debt = 1,350 divide by 54M shares = $25USD
Similarly I fail to see the rationale for a buyout for more than $45USD. Yet there are many here expecting a buyout at double or triple the current share price. I just don't get it.....
BTW I am long with a $33ish average. I see value at these levels but nowhere near the apparent concensus here.