Member Info for Redtom

I also obtained the debt numbers form the same source, ie $19.1bn. This translates at today's rate to approx �14bn.

I accept a low dividend is not attractive but the free cashflow is being used to pay down the debt. This is a better use than a dividend at this stage. And just to be clear the debt was �14bn at 31/12/17 ($19.1bn) reduced by approx $3-4bn from previous year end. �22bn is inaccurate. Given debt is reducing (5-6 years to clear), this becomes less of an issue. As long the company is forecasted to produce consistent free cahflow from its modestly growing profits, then this risk reduces all the time. A takeover would help but I don't see that happening in the near future. But it is not the only thing that can rescue this share, imo. Better and clearer communication (eg re divisional split-off) and continued steady profits/cash generation will eventually turn sentiment snd this will be rerated irrespective of takeover speculation. But it is all going to take time. I'm hoping that we can look back in 2-3 years time and joke about the ridiculously low share price of �30 that was seen at the start of 2018.

notgreedy, This is the question that I struggle with too. If this is as good as it implies, where the hell are the big institutional buyers snapping up this bargain? Suspicion and uncertainty reign here.

notgreedy, thanks. I don't think we are a million miles apart.

Hi Notgreedy, I realise that you are and have been very bearish on Shire but i would be intrigued to know where you think the share price should be. I accept it is no longer a high growth stock (its growth will be very modest going forward) but it still generates significant profits, has significant free cash flow (I think 5-6 years to pay off debt is more realistic) but pay a paltry dividend. Assuming that it continues on a steady path (ie modest growth, stable profits, debt reduction) and does not make any more acquisitions, where is a fair price? Please assume no bid premium as this may never happen. My calcs certainly come to more that �30 and probably around �40. Yours? So what about a bid premium? If the company continues on same financial path for a couple more years (ie steady profits, debt reducing), it will be on a PE of a lot less than 10 at current price. With other bigger companies trading on 15 -20 times, wouldn't Shire start to look attractive and earnings accreditive? Your thoughts would be most welcome. Tom

For a quiet Friday that was odd. Was very volatile and jumped to 3120 and then a yoyo for 5 minutes. Something strange going on.

What's going on today? Shot up in first minute?

A year ago today the SP closed at �48.10. What a difference a year can make! Would it be nice in 12 months' time if we could say, 'wow the SP was �29.60 this time last year and it is now �45.00. What a difference a year can make'. Irony huh?

W-I-M, I sense a bit of panic. Unless you need this money in the near term, I would relax and chill. In the longer term you will be fine but you are going to have to be patient. Sentiment & uncertainty are dragging and will continue to drag on this stock for a while. But at some point this will change and there will be a realignment but it could take a while. There is also the possibility of a takeover by the likes of Pfizer but I don't see that happening in 2018. If you are stressing, stop looking at daily movements and park it for 6 -12 months and re-assess it then.

You may consider his comments as 'trash' but they are not offensive. All comments on here are, to some extent, personal opinions. No one on here should be influenced by any one else's comments so I would let it go. I disagree with notgreedy and think he is talking bs, but that is his right.

How far off is Shire plc from its intrinsic value? Using the most recent financial data, I am going to take a look at whether the stock is fairly priced by estimating the company�s future cash flows and discounting them to their present value. I will use the discounted cash flows (DCF) model. I�m using the 2-stage growth model, which simply means we take in account two stages of company�s growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have perpetual stable growth rate. In the first stage we need to estimate the cash flows to the business over the next five years. For this I used the consensus of the analysts covering the stock. I then discount the sum of these cash flows to arrive at a present value estimate. 5-year cash flow forecast 2018 2019 2020 2021 2022 Levered FCF ($, Millions) $4,604.95 $5,298.83 $5,421.97 $5,836.44 $6,169.87 Source Analyst x11 Analyst x10 Analyst x5 Analyst x4 Analyst x4 Present Value Discounted @ 9.25% $4,214.93 $4,439.26 $4,157.70 $4,096.47 $3,963.73 Present Value of 5-year Cash Flow (PVCF)= $20,872 We now need to calculate the Terminal Value, which accounts for all the future cash flows after the five years. For a number of reasons a very conservative growth rate is used that cannot exceed that of the GDP. In this case I have used the 10-year government bond rate (1.5%). In the same way as with the 5-year �growth� period, we discount this to today�s value at a cost of equity of 9.3%. Terminal Value (TV) = FCF2022 � (1 + g) � (r � g) = $6,170 � (1 + 1.5%) � (9.3% � 1.5%) = $80,659 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = $80,659 / ( 1 + 9.3%)5 = $51,818 The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is �72,690. The last step is to then divide the equity value by the number of shares outstanding. This results in an intrinsic value of �58.32, which, compared to the current share price of �30.75, we find that Shire is quite good value at a 47.27% discount to what it is available for right now.

I wish I new. I expected a slow but steady increase now that the results are out. Whilst there was some negativity re 2018 growth, the PE ratio is so much below its peers that a re-evaluation must be due. But what do I know!

Can you imagine what would have happened to the SP if there had been some genuinely bad news!

Anyone managed to see the results yet?

I realise that I'm replying to my own post but I'm wondering whether the US tax reform will impact the 2017 results? This would be a non cash item so can probably be ignored but I note that SHP has significant deferred tax liabilities. If these are US deferred tax liabilities then they would be revalued at the new US tax rate of 21% as opposed to 35%. This could create a one-off tax benefit which would improves eps. I accept this should be mostly ignored but worth keeping an eye out for when the results are announced.

People, so what can we expect on Wednesday? I expect $15 per ADR for 2017 putting the Co on a PE of about 8.5. I hope that they forecast 2018 earnings of at least $16 which reduces the forward P/E to under 8. But I think the biggest focus will be on FCF given the level of debt. If they can continue (and forecast to continue) FCF of $1bn per Q, then this would give the markets some re-assurance that net debt will fall to below 3 times earning by Dec 2018. This ratio is am important one for the market watchers so I hope this level of FCF is maintained. I hope there is no writedown of Baxalta goodwill/intangible but I think there could be. Whether this is already baked into the price, who knows. No bad surprises please and deliver on every metric that was previously forecast. Give the markets a positive story to provide a foundation for the SP to move to more historic PE levels, ie say 12-13. But knowing Shire and their hopeless IR/PR depts, they are bound to cock it up! All the best for Wednesday. Tom

I agree, very depressing. Let's see how much more value can be destroyed by the IR team next week when the results are announced. If I were Ornskov, I would be very nervous as his head will be on the chopping block before long.

JamesDean, I can almost guarantee you that there will not be a takeover by half year. There is too much risk and expected information in the 2nd half. Happy for you to prove me wrong but I just can't see it anymore.

Joe, I agree with you re Bioverativ. The multiple paid for Haem. products was very high (something 27 times) and makes Shire's acquisition of Bax. seem like only a modestly bad deal as opposed to the disaster that it actually is. Market is really worrying about the lack of growth and level of debt and it would not surprise me to see a sizable write-down of intangibles with the YE results. This is a non cash item but will confirm that Shire paid way over the odds for Baxalta. The key will be the multiple of future earnings to debt levels and the interest coverage and operational free cash flow. This will go nowhere until there is much more clarity. Yet again the company is incapable of pushing out sensible updates to re-assure markets. The last message was a hidden profit warning and they are surprised as to the market reaction. Their IR & PR teams are still very amateur. I hope they improve.

13 January 2017, closing price 4661p 12 January 2018 price 3625p Congratulations to Shire Management for destroying shareholder value during a time of record share indices.