May 11, 2012

When does Provectus' share price start representing its true (or intrinsic) value?

With the stock in a ridiculous holding pattern (I am being subjective with the duration of the stock pciture below), now is as good a time as any to answer a question from Mammon's list.

Per Google Finance, the current market capitalization at closing Thursday was $88.75MM.

The true or intrinsic value of the company may well lie in the eyes of the beholder. The graphic below highlights the outcome of different valuation methodologies.

Setting aside a rather geek-filled discussion regarding "fully diluted," which relates to per share value, the value of Provectus might be in the range of $5-10B using a discounted cash flow analysis.

Comparable company valuations yield a lower enterprise value for Provectus.

But, as in my introduction in this post, Provectus trades at a significant discount to its peers.

Recent or precedent transactions provide a higher valuation.

So, how does Provectus' valuation get from $88.75MM to $5-10B, and when?

The company's valuation begins to get where it needs to go by steadily increasing in step function-like jumps in share price because of: the MM Phase 3 SPA, a dermatology term sheet, more Moffitt immunology data, the Munich MM Phase 2 data, additions to the board of directors and corporate advisory board, a NASDAQ listing, liver progress, etc.

These step-ups likely will be exaggerated by market euphoria or exuberance. That means higher share prices at points in time.

When does the share price represent the company's intrinsic value? When Pfizer buys Provectus. That event will represent the largest and final step function jump in share price.

As shareholders or prospective shareholders, we must ask ourselves: When do we get in?/When do we buy?

And also: When do we get out?/When do we sell? Or do we?

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