CRNC
Cerence Inc.
$10.98
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 49.4% below fair value
You pay
$10.98
Bear
$18.19
Fair
$21.72
Bull
$25.26
Bear
$18.19
+65.6%
$1.17 × 18x P/E
Fair
$21.72
+97.8%
$1.17 × 22x P/E
Bull
$25.26
+130.1%
$1.17 × 25x P/E
Key Value Driver
Normalized P/E multiple (22x base case)
Implied Market Multiple
9.4x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $8.00 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $21.72 per share.
Warnings
Wall Street's average price target is $8.00 (from 13 analysts). Our estimate is 214% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples