APLS
Apellis Pharmaceuticals, Inc.
$41.03
High-Growth Software
80%
Revenue × Terminal Margin DCF
Moderate
·
Conviction
Overvalued
Trading 22.4% above fair value
You pay
$41.03
Bear
$18.17
Fair
$33.52
Bull
$49.13
Bear
$18.17
-55.7%
9% rev growth, 21% terminal margin
Fair
$33.52
-18.3%
15% rev growth, 28% terminal margin
Bull
$49.13
+19.7%
19% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (15%) × margin expansion to 28%
Terminal Value % of EV
63%
Implied Market Multiple
5.3x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $32.50 from 25 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $33.52 per share.
Warnings
Our estimate assumes profit margins grow from 4% to 28% over 10 years. If that improvement stalls, the company is worth considerably less.
Gross margin of 90% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep