Nasdaq biotech up 2.68% hanging around the 2394 mark, been over 2400 twice
All go today:)
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Nasdaq biotech up 2.68% hanging around the 2394 mark, been over 2400 twice
All go today:)
Mac
What discount rate do you use in your 170 valuation
For PEB I use 15% as that is the sort of long term annual return I expect to compensate for 'risk'
Winner, I'm generally starting to raise WACC across the board now, interest rates are on the rise and the cost of capital may start to increase a little going forward, I haven’t been doing formal BETA calc's thus far in this cycle but may start to do so now.
My feel is a WACC of 11.25 to 11.75% should be fine for PEB for HY15.
Yesterday on the NTL thread I applied a WACC of 13%, quite high for this stage in the cycle but it's a company really still at a pre-feasibility stage, it still requires capitalisation and has yet to establish as an operational business. Noting that PWC for instance use a WACC of 11.2% for NTL which I consider to be a little low for the company at this stage.
Pacific Edge has completed capitalisation, laboratories are constructed, startup capital has been spent on time and on budget, they are becoming an operational business, guidance is that they will become profitable this calendar year, cxbladder should probably become a nice cashflow cash cow from FY15.
Generally PWC guidelines may provide some insight for you as good as any;
http://www.pwc.co.nz/appreciating-va...-wacc-formula/
http://www.pwc.co.nz/PWC.NZ/media/pd...ember-2013.pdf
Good luck
Congratulations to the Pacific Edge team on winning the NZBIO / Janssen Excellence Award for 'Company of the Year' at the 2014 NZBIO Conference last night! Great to see their work recognised!
Ha, it is easy to pick a number out of the air esp a nice big one, but some 'science' and analysis is actually required.
WACC is a derivative of the marginal cost of both debt and equity funding, for companies that are about to become profitable like Pacific Edge, BETA calc's don't apply but there are alternate methods in this instance, have a read of links that I posted as a fair starting reference.
You may be surprised to hear that late last year PWC derived an average market WACC of 8.4%, this will start to increase slowly now going forward. Small businesses, as going concerns, typically have a WACC 2% higher than average.
A WACC of 11.25 to 11.75 is appropriate for Pacific Edge at this time and stage.
many regards, Mac
http://www.pwc.co.nz/appreciating-va...-wacc-formula/
http://www.pwc.co.nz/PWC.NZ/media/pd...ember-2013.pdf
MAC, I see PWC have PEB at 12.1 in the report sourced via your second link
Yip was looking like it could have been a good day, till someone put a 300000 lot down, nothing stops a uptrend from starting quicker then a big packet of shares.
Yes, quite right and well noted Xerof, that was their determination in September last year, however they may also have revised as Pacific Edge as we know have de-risked quite a lot more since then and the company is now another six months closer to becoming profitable, probably at HY15 IMHO rather that at FY14 in a few weeks.