IOSP
Innospec Inc.
$95.65
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 31.1% above fair value
You pay
$95.65
Bear
$59.21
Fair
$72.96
Bull
$85.86
Bear
$59.21
-38.1%
5% stage 1 growth, 11% discount
Fair
$72.96
-23.7%
8% stage 1 growth, 11% discount
Bull
$85.86
-10.2%
11% stage 1 growth, 11% discount
Adjust Assumptions
8.3%
11.0%
3.0%
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
37%
Implied Market Multiple
25.8x
Market is pricing in (growth)
12.4%
vs 8.3% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$110.00
Divergence from AlphaVal
34%
Summary
Using a two-stage FCF DCF with 8% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $72.96 per share.
Warnings
Wall Street's average price target is $110.00 (from 9 analysts). Our estimate is 34% 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