Dynavax Technologies Corp (DVAX, Financial) recently recorded a daily gain of 2.7%, marking a 3-month gain of 11.38%. The company's Earnings Per Share (EPS) stands at 0.72. These figures prompt a critical question: Is Dynavax Technologies modestly overvalued? This article provides an in-depth valuation analysis of Dynavax Technologies, offering valuable insights for potential investors.
Company Overview
Dynavax Technologies Corp is a biopharmaceutical company specializing in leveraging the body's innate and adaptive immune responses through toll-like receptor stimulation. Its current product candidates are under investigation for multiple cancer indications and a vaccine for the prevention of Hepatitis B. The company's Toll-like Receptor Immune Modulation Platform technology plays a vital role in innate immunity and adaptive immunity. Most of its revenue comes from the sale of its CpG 1018 product and HEPLISAV-B.
GF Value: A Comprehensive Valuation Method
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. This value is derived from historical trading multiples, a GuruFocus adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
According to this valuation method, Dynavax Technologies (DVAX, Financial) appears to be modestly overvalued. With a current share price of $14.47 and a market cap of $1.90 billion, the stock's future return is likely to be lower than its business growth due to its overvaluation.
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Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy shares. Dynavax Technologies has a cash-to-debt ratio of 2.64, ranking better than 64.84% of 1058 companies in the Drug Manufacturers industry. Based on this, GuruFocus ranks Dynavax Technologies's financial strength as 8 out of 10, suggesting a strong balance sheet.
Profitability and Growth
Investing in profitable companies, especially those demonstrating consistent profitability over the long term, poses less risk. Dynavax Technologies has been profitable two times over the past ten years. The company recorded a revenue of $459.40 million and Earnings Per Share (EPS) of $0.72 over the past twelve months. Its operating margin is 22.46%, ranking better than 88.3% of 1051 companies in the Drug Manufacturers industry. However, GuruFocus ranks the profitability of Dynavax Technologies at 3 out of 10, indicating poor profitability.
Growth is a critical factor in a company's valuation. Dynavax Technologies has a 3-year average annual revenue growth rate of 114%, ranking better than 98.48% of 924 companies in the Drug Manufacturers industry. However, its 3-year average EBITDA growth rate is 0%, ranking worse than 0% of 887 companies in the Drug Manufacturers industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another way to determine its profitability. If the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Dynavax Technologies's ROIC is 39.82, and its WACC is 13.41.
Conclusion
In summary, Dynavax Technologies (DVAX, Financial) appears to be modestly overvalued. The company boasts strong financial condition but poor profitability. Its growth ranks worse than 0% of 887 companies in the Drug Manufacturers industry. To learn more about Dynavax Technologies stock, you can check out its 30-Year Financials here.
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