NTGR
NETGEAR, Inc.
$22.35
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 3.8% below fair value
You pay
$22.35
Bear
$18.59
Fair
$23.24
Bull
$27.89
Bear
$18.59
-16.8%
$1.27 × 12x P/E
Fair
$23.24
+4.0%
$1.27 × 15x P/E
Bull
$27.89
+24.8%
$1.27 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
17.7x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $36.00 from 17 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $23.24 per share.
Warnings
Wall Street's average price target is $36.00 (from 17 analysts). Our estimate is 47% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples