CEVA
CEVA, Inc.
$38.52
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 94.9% above fair value
You pay
$38.52
Bear
$18.00
Fair
$19.76
Bull
$21.54
Bear
$18.00
-53.3%
$0.24 × 12x + net cash
Fair
$19.76
-48.7%
$0.24 × 16x + net cash
Bull
$21.54
-44.1%
$0.24 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.24)
Implied Market Multiple
161.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $47.00 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $19.76 per share.
Warnings
Price-to-book value of 3.9x 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 $47.00 (from 26 analysts). Our estimate is 77% 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