EXTR
Extreme Networks, Inc.
$30.28
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 110.5% above fair value
You pay
$30.28
Bear
$11.64
Fair
$14.39
Bull
$16.90
Bear
$11.64
-61.6%
5% stage 1 growth, 12% discount
Fair
$14.39
-52.5%
8% stage 1 growth, 12% discount
Bull
$16.90
-44.2%
10% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
32%
Implied Market Multiple
60.3x
Market is pricing in (growth)
25.9%
vs 7.5% base
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 $33.67 from 18 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $14.39 per share.
Warnings
Wall Street's average price target is $33.67 (from 18 analysts). Our estimate is 76% 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