RE:SOTP analysis for longsWorth remembering that the market does not always efficiently price stocks.
VTAE was just bought out by Allergan at a 160% premium - it is not in any way a comparable to Concordia, more of just a reminder how the market does not necessarily capture value correctly.
colt451 wrote: I ran a simplified SOTP analysis to decide whether to hold or sell, it showed the potential for 100% upside from the current PPS therefore I concluded I would continue to hold - however it should be noted that in the case of fraud these numbers are worthless.
I calculated conservative guidance for 2017 @ $480M EBITDA.
AMCO segment: $480M * 60% = $288M/year EBITDA
$288M/year * 11X multiple = $3.17B AMCO Segment Valuation.*
NA segment: 480*40% = $192M/year EBITDA.
$192M/year * 4X multiple = $768M NA Segment Valuation**
Net Debt: $3.5B - $145M cash - $100M 2H 16' positive cash flow = $3.26B Net Debt
$3.26B debt - $3.17B AMCO sale = $100M in debt outstanding.
$768M NA segment sale - $100M in debt outstanding = $668M Net Proceeds
$668M/51 = $13/share
*11X multiple is based on high single digit AMCO growth, similar companies with high single digit growth have been acquired in the past year between 12X - 25X EBITDA.
**A 4X multiple was used to account for declining growth in NA portfolio, however it should be noted that there has not been a single pharma sale at a 4X EBITDA valuation - the lowest I have come across in the past 2 years is 6X.