EXTR
Extreme Networks, Inc.
$25.60
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 103.3% above fair value
You pay
$25.60
Bear
$10.19
Fair
$12.59
Bull
$14.79
Bear
$10.19
-60.2%
5% stage 1 growth, 12% discount
Fair
$12.59
-50.8%
8% stage 1 growth, 12% discount
Bull
$14.79
-42.2%
10% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
32%
Implied Market Multiple
50.9x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $26.50 from 17 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $12.59 per share.
Warnings
Wall Street's average price target is $26.50 (from 17 analysts). Our estimate is 70% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions