CEVA
CEVA, Inc.
$39.43
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 118.9% above fair value
You pay
$39.43
Bear
$16.41
Fair
$18.01
Bull
$19.63
Bear
$16.41
-58.4%
$0.24 × 12x + net cash
Fair
$18.01
-54.3%
$0.24 × 16x + net cash
Bull
$19.63
-50.2%
$0.24 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.24)
Implied Market Multiple
165.6x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $40.00 from 25 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $18.01 per share.
Warnings
Price-to-book value of 4.0x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $40.00 (from 25 analysts). Our estimate is 73% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing