What is ORPH.L's Intrinsic value?

Open Orphan PLC (ORPH.L) Intrinsic Value Analysis

Executive Summary

As of May 24, 2025, Open Orphan PLC's estimated intrinsic value ranges from $25.86 to $25.86 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $25.86 +70.7%

Is Open Orphan PLC (ORPH.L) undervalued or overvalued?

With the current market price at $15.15, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Open Orphan PLC's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 4.4% 4.9%
Equity market risk premium 6.4% 7.4%
Adjusted beta 0.49 0.59
Cost of equity 7.6% 9.8%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 0.02 0.02
After-tax WACC 7.5% 9.7%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $13M
Discount Rate (WACC) 9.7% - 7.5%
Enterprise Value $129M - $166M
Net Debt $(27)M
Equity Value $156M - $193M
Outstanding Shares 7M
Fair Value $23 - $29
Selected Fair Value $25.86

Key Financial Metrics

Metric Value
Market Capitalization $102M
Enterprise Value $75M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 17.25
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.02

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $2.59
Weighted Average 100% $25.86

Investment Conclusion

Based on our comprehensive valuation analysis, Open Orphan PLC's weighted average intrinsic value is $25.86, which is approximately 70.7% above the current market price of $15.15.

Key investment considerations:

  • Strong projected earnings growth (-2% to -1% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.02)

Given these factors, we believe Open Orphan PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.