RGNX
REGENXBIO Inc.
$10.42
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 63.9% below fair value
You pay
$10.42
Bear
$10.92
Fair
$28.87
Bull
$43.31
Bear
$10.92
+4.8%
18% rev growth, 21% terminal margin
Fair
$28.87
+177.0%
30% rev growth, 28% terminal margin
Bull
$43.31
+315.6%
35% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (30%) × margin expansion to 28%
Terminal Value % of EV
69%
Implied Market Multiple
3.3x
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 $20.60 from 20 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $28.87 per share.
Warnings
Stock-based employee pay is 20% of revenue — your ownership shrinks by about 2.0% each year as new shares are issued. Our estimate already accounts for this dilution.
Our estimate assumes profit margins grow from 0% to 28% over 10 years. If that improvement stalls, the company is worth considerably less.
Gross margin of 88% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $20.60 (from 20 analysts). Our estimate is 53% above the consensus -- consider that gap carefully.
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