RBC Target still at 25 $ us --upside 38 $ us..unchanged Target price/base case Our $25 price target is based on the average of our EV/EBITDA valuation and DCF analysis. Applying an 8.0x multiple to our 2017 Adj. EBITDA forecast of ~$526MM generates a value of $24.05. Our DCF value (11.0% WACC and a -2% terminal growth rate) equates to $25.79. The average of our EV/EBITDA and DCF values is $24.92, hence our $25 price target. There are no further acquisitions included in our base case. We assume that Photofrin is approved for bile duct cancer in 2018.
Upside scenario Our $38 upside scenario utilizes a 8.5x multiple on 2017E Adj. EBITDA of $576MM, equating to a value of $37.21. Our DCF value equates to $39.05. The average of our EV/EBITDA and DCF values is $38.13 rounded to our $38 upside value. This scenario utilizes a 1% terminal growth rate and higher multiple plus incrementally higher EBITDA to reflect stronger organic growth. We also assume that Photofrin is approved for bile duct cancer in 2018.