<div id="readability-page-1"><div><h3>Key Insights</h3><ul><li> IMV's estimated fair value is JP¥1,578 based on 2 Stage Free Cash Flow to Equity </li> <li> IMV's JP¥1,622 share price indicates it is trading at similar levels as its fair value estimate </li> <li> When compared to theindustry average discount of -21%, IMV's competitors seem to be trading at a greater premium to fair value </li> </ul><p>Does the March share price for IMV Corporation (TSE:7760) reflect what it's really worth? Today, we will estimate the stock's intrinsic value  by projecting its future cash flows and then discounting them to today's value.  We will use the Discounted Cash Flow (DCF) model on this occasion.  Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.</p><p> Remember though, that there are many ways to estimate a company's value, and a DCF is just one method.  For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. </p><p><span> Check out our latest analysis for IMV </span></p><h2> Is IMV Fairly Valued? </h2> <p> We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period.  To start off with, we need to estimate the next ten years of cash flows.   Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.  </p><p> Generally we assume that a dollar today is more valuable than a dollar in the future,  so we need to discount the sum of these future cash flows to arrive at a present value estimate: </p><h4> 10-year free cash flow (FCF) forecast </h4><table><tbody><tr><td> </td><td><strong>2025</strong></td><td><strong>2026</strong></td><td><strong>2027</strong></td><td><strong>2028</strong></td><td><strong>2029</strong></td><td><strong>2030</strong></td><td><strong>2031</strong></td><td><strong>2032</strong></td><td><strong>2033</strong></td><td><strong>2034</strong></td></tr><tr><td><strong> Levered FCF (¥, Millions) </strong></td><td>JP¥1.39b</td><td>JP¥1.44b</td><td>JP¥1.48b</td><td>JP¥1.51b</td><td>JP¥1.53b</td><td>JP¥1.55b</td><td>JP¥1.57b</td><td>JP¥1.58b</td><td>JP¥1.59b</td><td>JP¥1.60b</td></tr><tr><td><strong>Growth Rate Estimate Source</strong></td><td>Est @ 5.06%</td><td>Est @ 3.65%</td><td>Est @ 2.67%</td><td>Est @ 1.98%</td><td>Est @ 1.50%</td><td>Est @ 1.16%</td><td>Est @ 0.92%</td><td>Est @ 0.76%</td><td>Est @ 0.64%</td><td>Est @ 0.56%</td></tr><tr><td><strong> Present Value (¥, Millions) Discounted @ 6.4% </strong></td><td>JP¥1.3k</td><td>JP¥1.3k</td><td>JP¥1.2k</td><td>JP¥1.2k</td><td>JP¥1.1k</td><td>JP¥1.1k</td><td>JP¥1.0k</td><td>JP¥958</td><td>JP¥906</td><td>JP¥856</td></tr></tbody></table><p><i>(&#34;Est&#34; = FCF growth rate estimated by Simply Wall St)</i><br/><strong>Present Value of 10-year Cash Flow (PVCF)</strong> = JP¥11b</p><p> The second stage is also known as Terminal Value, this is the business's cash flow after the first stage.  The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 0.4%. We discount the terminal cash flows to today's value at a cost of equity of 6.4%. </p><p><strong>Terminal Value (TV)</strong>= FCF<sub>2034</sub> × (1 + g) ÷ (r – g) = JP¥1.6b× (1 + 0.4%) ÷ (6.4%– 0.4%) = JP¥26b</p><p><strong>Present Value of Terminal Value (PVTV)</strong>= TV / (1 + r)<sup>10</sup>= JP¥26b÷ ( 1 + 6.4%)<sup>10</sup>= JP¥14b</p><p> The total value, or equity value, is then the sum of the present value of the future cash flows,  which in this case is JP¥25b.  The last step is to then divide the equity value by the number of shares outstanding.  Compared to the current share price of JP¥1.6k, the company appears   around fair value    at the time of writing.   Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. </p><figure><img height="380" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/22744680-dcf-1-dark/1741390498020?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="853" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/22744680-dcf-1-dark/1741390498020"/><figcaption>TSE:7760 Discounted Cash Flow March 7th 2025</figcaption></figure> <h2> The Assumptions </h2><p> We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.  If you don't agree with these result, have a go at the calculation yourself and play with the assumptions.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at IMV as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 6.4%, which is based on a levered beta of 1.149. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. </p> <h3>SWOT Analysis for IMV</h3><div><div><p><strong>Strength</strong></p><ul><li>Earnings growth over the past year exceeded the industry.</li></ul> <ul><li>Debt is not viewed as a risk.</li></ul> <ul><li>Dividends are covered by earnings and cash flows.</li></ul> <ul> Dividend information for 7760.</ul> </div><div><p><strong>Weakness</strong></p><ul><li>Earnings growth over the past year is below its 5-year average.</li></ul> <ul><li>Dividend is low compared to the top 25% of dividend payers in the Electronic market.</li></ul> <ul><li>Expensive based on P/E ratio and estimated fair value.</li></ul> <ul> What are analysts forecasting for 7760?</ul> </div><div><p><strong>Opportunity</strong></p><ul><li>Annual revenue is forecast to grow faster than the Japanese market.</li></ul> </div><div><p><strong>Threat</strong></p><ul><li>No apparent threats visible for 7760.</li></ul></div></div><h2> Looking Ahead: </h2><p> Valuation is only one side of the coin in terms of building your investment thesis, and it  shouldn't be the only metric you look at when researching a company.  DCF models are not the be-all and end-all of investment valuation.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation.  For IMV, there are three  essential  items  you should further research: </p><ol> <li> <strong>Risks</strong>: You should be aware of the <strong>1 warning sign for IMV</strong> we've uncovered before considering an investment in the company. </li> <li><strong>Future Earnings</strong>: How does 7760's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.</li><li> <strong>Other Solid Businesses</strong>: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! </li> </ol><p> PS. Simply Wall St updates its DCF calculation for every Japanese stock every day, so if you want to find the intrinsic value of any other stock just search here.</p><div><p>If you're looking to trade IMV, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers.</p><p>With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account.</p><p>Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer.</p><p><span>Sponsored Content</span></p></div></div></div>

7760

<p>IMV Corporation (TSE:7760) has an estimated fair value of JP¥1,578, with its current share price at JP¥1,622, indicating it is trading close to its fair value. A two-stage Discounted Cash Flow (DCF) model was used to project future cash flows, resulting in a total equity value of JP¥25 billion. The analysis suggests that IMV is fairly valued, but emphasizes that DCF is just one method of valuation and does not account for industry cyclicality or future capital needs.</p>

A Look At The Fair Value Of IMV Corporation (TSE:7760)