MNKD
MannKind Corporation
$3.38
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 56.7% below fair value
You pay
$3.38
Bear
$2.95
Fair
$7.80
Bull
$13.81
Bear
$2.95
-12.8%
15% rev growth, 21% terminal margin
Fair
$7.80
+130.8%
25% rev growth, 28% terminal margin
Bull
$13.81
+308.4%
32% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (25%) × margin expansion to 28%
Terminal Value % of EV
66%
Implied Market Multiple
3.9x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $8.25 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $7.80 per share.
Warnings
Our estimate assumes profit margins grow from 4% to 28% over 10 years. If that improvement stalls, the company is worth considerably less.
Gross margin of 82% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep