ZVRA
Zevra Therapeutics, Inc.
$10.03
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 51.4% below fair value
You pay
$10.03
Bear
$9.23
Fair
$20.64
Bull
$29.82
Bear
$9.23
-7.9%
18% rev growth, 21% terminal margin
Fair
$20.64
+105.7%
30% rev growth, 28% terminal margin
Bull
$29.82
+197.3%
35% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (30%) × margin expansion to 28%
Terminal Value % of EV
69%
Implied Market Multiple
4.4x
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 $25.50 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $20.64 per share.
Warnings
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 85% 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