Halozyme Therapeutics Inc is scored 73 for moat and 95 for management. The management score rests on a return on invested capital of 23.6% and a gross margin of 78.1% — figures that describe a business turning capital into profit efficiently. The balance sheet carries debt at 43.89x equity, which magnifies both the returns above and the risk beneath them. The solid moat and exceptional management are not the same judgement, and the gap between them is where the argument about this business sits.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 15.0% a year, below the 39.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 30.0x. That produces an intrinsic value of $100.50, a 10-CAP price of $66.82 and a payback time price of $105.48, with the value zone set at the highest of the three, $105.48. Today's price of $106.94 sits 1% above it.
The operating figures describe a business performing at a high level; the price asks for that performance to continue and then some. A margin of safety score of 47 is the measure of how little room that leaves for being wrong.
| Price | $106.94 |
| Market cap | $12.7B |
| P/E ratio | 31.9x |
| Return on invested capital | 23.6% |
| Gross margin | 78.1% |
| Debt to equity | 43.89x |
| Free cash flow yield | 8.0% |
| Growth rate used | 15.0% |
| Growth rate measured | 39.0% |
| Exit multiple assumed | 30.0x |
| Company | Moat | Buy price |
| Bio-Techne (TECH) | 50 | $17.73 |
| Biomarin Pharmaceutical Inc (BMRN) | 84 | $53.67 |
| Jazz Pharmaceuticals Plc (JAZZ) | 53 | $321.05 |
| Incyte (INCY) | 88 | $140.62 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Halozyme Therapeutics Inc rather than accepting ours.