NantKwest, Inc. – Value Analysis (NASDAQ:NK) : August 15, 2017

Capitalcube gives NantKwest, Inc. a score of 21.

Our analysis is based on comparing NantKwest, Inc. with the following peers – Momenta Pharmaceuticals, Inc., Molecular Templates, Inc., Seres Therapeutics Inc and Microbix Biosystems Inc. (MNTA-US, MTEM-US, MCRB-US and MBX-CA).

Investment Outlook

NantKwest, Inc. has a fundamental score of 21 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It trades at a lower Price/Book multiple (1.85) than its peer median (3.20).
  • NK-US‘s earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful to make this analysis between operating advantage (ROE) and growth expectations (as suggested by P/E or P/EBITDA).
  • NK-US‘s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • NK-US‘s return on assets has improved from below median to about median among its peers over the last five years.
  • NK-US‘s earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful for an analysis between historical growth (using annualized three-year revenue growth) and investor growth expectations (as suggested by P/E or Price/EBITDA) .
  • NK-US‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

NK-US would seem to have a hard time raising additional debt.

  • With debt at a relatively low 4.97% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 0%), and relatively tight interest coverage level of -417.13x, NK-US would have a hard time raising much additional debt. Thus, the company is classified as having Limited Flexibility when it comes to raising more debt.
  • Of the 4 chosen peers for the company, only 1 of the stocks have an outstanding debt balance (including MBX-CA). Companies with no debt include MNTA-US, MTEM-US and MCRB-US.

NK-US has maintained its Constrained profile from the recent year-end.

  • NK-US‘s interest coverage has increased 1,469.23 points from last year’s low but is still below its five-year average interest coverage of -225.94.
  • Though its interest coverage increased to -417.13x from -1,886.36x (in 2016), its peer median remained relatively stable during this period at 999x.
  • Interest coverage rose 1,469.23 points relative to peers. It is also below the 2.50x coverage benchmark unlike the peer median.
  • NK-US‘s debt-EV is its highest relative to the last five years and compares to a low of -0.45% in 2014.
  • Like the interest coverage trend, its debt-EV also increased (to 4.97% from 2.95%), while its peer median remained relatively stable during this period at 0%.
  • Relative to peers, debt-EV rose 2.02 percentage points.

Access the detailed analysis for NantKwest, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Momenta Pharmaceuticals, Inc. 0 4.08 No interest exp 999
Molecular Templates, Inc. 0 8.41 No interest exp 999
Seres Therapeutics Inc 0 6.86 No interest exp 999
Microbix Biosystems Inc. 32.83 1.08 0.99 15.31
NantKwest, Inc. 4.97 4.92 -417.13 -313.19
Peer Median 0 4.92 No interest exp 999
Best In Class 4.97 8.41 No interest exp 999

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Company Profile

NantKwest, Inc. is a next generation clinical-stage immunotherapy company, which engages n the development and production of cancer treatment products. Its products are based on its proprietary natural killer (NK) cell line, NK-92. The firm operates through the following geographical segments: United States; Europe; and Other non-U.S. It also develops cell therapies for renal cell carcinoma and melanoma. The company was founded by Gary N. Keller and Hans Georg Klingemannon October 7, 2002 and is headquartered in Culver City, CA.

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