ZYME
Zymeworks Inc.
$25.26
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Overvalued
Trading 74.5% above fair value
You pay
$25.26
Bear
$7.40
Fair
$14.48
Bull
$23.42
Bear
$7.40
-70.7%
16% rev growth, 21% terminal margin
Fair
$14.48
-42.7%
27% rev growth, 28% terminal margin
Bull
$23.42
-7.3%
35% rev growth, 32% terminal margin
Adjust Assumptions
27.0%
28.0%
12.0%
Key Value Driver
Revenue growth (27%) × margin expansion to 28%
Terminal Value % of EV
69%
Implied Market Multiple
15.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$41.40
Divergence from AlphaVal
65%
Summary
Projecting 27% revenue growth with FCF margins expanding from 0% to 28% over 10 years, discounted at 12%, the base-case value is $14.48 per share.
Warnings
Stock-based employee pay is 26% 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 100% 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 $41.40 (from 22 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