XNCR
Xencor, Inc.
$24.05
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Overvalued
Trading 101.2% above fair value
You pay
$24.05
Bear
$8.17
Fair
$11.95
Bull
$15.96
Bear
$8.17
-66.0%
10% rev growth, 21% terminal margin
Fair
$11.95
-50.3%
16% rev growth, 28% terminal margin
Bull
$15.96
-33.7%
21% rev growth, 32% terminal margin
Adjust Assumptions
16.0%
28.0%
12.0%
Key Value Driver
Revenue growth (16%) × margin expansion to 28%
Terminal Value % of EV
67%
Implied Market Multiple
11.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (28 analysts)
$34.40
Divergence from AlphaVal
65%
Summary
Projecting 16% revenue growth with FCF margins expanding from 0% to 28% over 10 years, discounted at 12%, the base-case value is $11.95 per share.
Warnings
Stock-based employee pay is 34% 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 92% 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 $34.40 (from 28 analysts). Our estimate is 65% below 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