IOSP
Innospec Inc.
$79.58
Platform & Compounding FCF
50%
Two-stage FCF DCF
Mild
·
Conviction
Fair Value
Trading 0.7% below fair value
You pay
$79.58
Bear
$64.75
Fair
$80.17
Bull
$94.65
Bear
$64.75
-18.6%
5% stage 1 growth, 11% discount
Fair
$80.17
+0.7%
8% stage 1 growth, 11% discount
Bull
$94.65
+18.9%
11% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
37%
Implied Market Multiple
21.4x
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 $115.00 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $80.17 per share.
Warnings
Wall Street's average price target is $115.00 (from 9 analysts). Our estimate is 38% 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