What is OTLK's Intrinsic value?

Outlook Therapeutics Inc (OTLK) Intrinsic Value Analysis

Executive Summary

As of May 29, 2025, Outlook Therapeutics Inc's estimated intrinsic value ranges from $6.04 to $6.04 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Stable) $6.04 +270.5%

Is Outlook Therapeutics Inc (OTLK) undervalued or overvalued?

With the current market price at $1.63, 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 Outlook Therapeutics Inc's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.84 1.49
Cost of equity 7.7% 13.2%
Cost of debt 5.0% 5.0%
Tax rate 0.0% 3.4%
Debt/Equity ratio 0.68 0.68
After-tax WACC 6.6% 9.8%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.5%
  • Long-term growth rate: 0.5%
  • Fair value: $-12.34 (-857.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 13.2% (Low) to 7.7% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $3 to $9
  • Selected fair value: $6.04 (270.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $53M
Enterprise Value $79M
Trailing P/E 2.52
Forward P/E 2.52
Trailing EV/EBITDA 0.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.68

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
Dividend Discount Model (Stable) 100% $0.91
Weighted Average 100% $6.04

Investment Conclusion

Based on our comprehensive valuation analysis, Outlook Therapeutics Inc's weighted average intrinsic value is $6.04, which is approximately 270.5% above the current market price of $1.63.

Key investment considerations:

  • Overall financial health and market position

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