Lannett (LCI:NYS) Fundamental Valuation Report

Fundamental Valuation Report


Healthcare:Drug Manufacturers-Specialty & Generic

This Report was generated using the valuation tools available on For a free 30 day trial click here.

Close Price/Date
$7.52 (USD) 29/01/2019

Weighted Valuation
$7.77 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 3.3%

Valuation Models Analyst Consensus: $8.00 (USD)
(in order of importance) Discounted Cash Flow: $7.75 (USD)
Comparables: $7.10 (USD)
Valuation Methods This company is:
Cash Flow: Fairly valued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (LCI:NYS USD)

Price 7.52
Range 7.37 – 8.22
52 week 3.43 – 21.25
Open 8.13
Vol / Avg. 1.66M/1.57M
Mkt cap 295.3M
P/E 4.88
Div/yield 0.00/0.00
EPS 0.75
Shares 39.27M
Beta 1.93

Company Description

Lannett Co Inc develops, manufactures, packages, markets, and distributes generic versions of brand pharmaceutical products. It offers solid oral, extended release, topical, nasal, and oral solution finished dosage forms of drugs that address a range of therapeutic areas, as well as ophthalmic, patch, foam, buccal, sublingual, soft gel, and injectable dosages. In addition, the company also provides its products for various medical indications comprising glaucoma, gastrointestinal, migraine, obesity, respiratory and others. It operates in the segment of generic pharmaceuticals. Its customers include generic pharmaceutical distributors, drug wholesalers, chain drug stores, private label distributors, mail-order pharmacies, and others.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for LCI:NYS

Using a discounted cash flow model we generated an intrinsic value of $7.75 (USD) for LCI:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

LCI:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $7.75 1% 5% 1% 5%
WACC (or Ke) 7.94 $16.47 $1.92
Terminal Growth Rate 2.90 $2.39 $15.76
Tax Rate 0.27 $10.93 $4.56
Cash Flow 163,405,151 $4.98 $10.52
Capital Expenditures -36,547,400 $7.16 $8.34
Long Term Debt 1,053,688,000 $9.09 $6.41

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $7.10 (USD) for LCI:NYS. We also generated a valuation of $21.81 (USD) using other metrics and comparables.
The comparable companies were Akorn (AKRX:NAS), Amphastar Pharmaceuticals (AMPH:NAS), Eagle Pharmaceuticals (EGRX:NAS), Karyopharm Therapeutics (KPTI:NAS) and Momenta Pharmaceuticals (MNTA:NAS).

Company LCI:NYS End Date Value
Earnings/Share ($7.25) (USD)
Book Value/Share $7.95 (USD)
Sales/Share $17.96 (USD)
Cash Flow/Share $4.59 (USD)
EBITDA/Share $5.03 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 58.7
$22.42 (USD) -49.6
$10.49 (USD) -72.4
($22.01) (USD) -49.3
$0.00 (USD) 0.0
0.00 PE Ratio 21.90 0.00 0.00 21.90 0.00 0.00
0.62 PB Ratio 2.82 0.65 2.87 2.89 3.33 4.37
0.28 PS Ratio 6.34 0.58 3.54 3.06 15.91 8.62
1.08 PCF Ratio 48.08 104.27 24.42 15.54 0.00 0.00
0.00 EV to EBITDA 99.67 0.00 184.76 14.58 0.00 0.00


Using a multiples approach we generated a valuation of  $29.78 (USD) for LCI:NYS

Company LCI:NYS End Date Value
Earnings/Share ($7.25) (USD)
Book Value/Share $7.95 (USD)
Sales/Share $17.96 (USD)
Cash Flow/Share $4.59 (USD)
EBITDA/Share $5.03 (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$12.81 (USD) 0
$30.17 (USD) 0
$31.54 (USD) 0
$44.62 (USD) 0
Ratios Ratio Average
PE Ratio 13.98
PB Ratio 1.61
PS Ratio 1.68
PCF Ratio 6.88
EV to EBITDA 8.87

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  LCI:NYS for the last 10 years was  1.60

We ran the Adjusted Book Value for  LCI:NYS and generated a book value of  $8.35 (USD)
By multiplying these we get an adjusted valuation of  $13.32 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for LCI:NYS. The 1 analysts have a concensus valuation for LCI:NYS for 2019 of $8.00 (USD).

LCI:NYS Lannett

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 1 0 3.0000 Hold 2019-1-28

Current Price: 7.52 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 2.02 0.90
# EPS Analysts 1 1
Mean Revenue 600.10 500.30
# Revenue Analysts 1 1
Mean Target Price 8.00
Mean Cash Flow
Mean Net Income 80.30 36.20
Mean Debt Outstanding
Mean Tax Rate 23.00 23.00
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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