May 29, 2012

Blog Reader Question

Do you have a source for and/or a link to the comparable company valuation for Provectus?

The comparable company valuation from this post, here, and the other valuation methodologies were prepared by Provectus using stock price data from May 7.

The most recent comparable company valuation prepared by an equity research analyst covering Provectus was conducted by Stonegate Securities using stock data from May 16.

The mediam market capitalizations and enterprise values are in the ballpark. Average or mean valuations are not; Stonegate includes Amgen, now, because this company acquired the comp Micromet. The addition of Amgen skews the average market cap or EV figure. See below for the comparable company table from late-2011, the valuation metrics for which are (accounting for different share prices) more consistent:

Irrespective of whether one utilizes the company's comparable company analysis or an investment bank's work like that done by Stonegate, there is -- stating the rather obvious -- a dramatic difference between Provectus' valuation (market capitalization and enterprise value), and the mean/average and median figures.

Valuation practitioners will (should) assess a discount to valuation because Provectus trades on the OTC. For private companies, for example, where shares are not publicly traded or, typically, liquid, the discount can range from about 20-30%. While the discount would not be that dramatic, between a company trading on the NASDAQ and the OTC, it is, nevertheless, material. Of course, there is a lack of awareness component as well as a skepticism component related to Provectus that also contributes to a low share price (or increases the overall discount).

A better comparable company comparison should come when Provectus moves to the NASDAQ. After a point in time, it would be useful to revisit the comparison to see how Provectus' valuation metrics compare with comparables then.

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