Amarin Corp Plc (AMRN)

[HerbieRay]

Re: SA Article

The coming DCF discounted Cash flow study mentioned at the end of this article should be interesting. I think they are awaiting Q2 results so they can "refine" the model.

I have been tracking about 6 of these AMRN DFC models from various sources for the past 8 months now, and there are so many variables, so many assumptions, that the I am now convinced that they can only give a range. One of the largest culprits in DCF is the "discount' rate assumption, followed by the "growth" rate.

These 6 studies have produced "discounted present values" of from $3 a share to $12 a share.

The growth rate is simply an estimate of Y/Y % earnings, affected by revenues and the cost of doing business, neglecting or maybe predicting one time charges for patent litigations, neglecting or predicting the effect of competition (e.g. generics), and attempting to predict the order of acceptance by physicians, price increases, and inflation.

The discount rate is still a mystery to me, and as an engineer with a minor in math, I am quick to say I am befuddled.

I'm no longer a fan of DCF.