Strategic and Financial Valuation of Össur

Edda Falak

Student thesis: Master thesis

Abstract

The focus of this thesis was to find the fair value per shareof Össur as of today. The thesis also seeks to estimate whether the shares are over-or undervalued. In the last year, share price has been fluctuating. On January 9th, the share price was 29.50 and fell to 26.50 in May. Since then, Össur’s share price has been increasing rapidly and shown a 22% increase from beginning of May.
The economic factors influencing Össur’s value were estimated in a strategic analysis. The analysis included a macro-, industry-and internal analysis which were summed up in a SWOT analysis. The result from the analysis showed that the market drivers for Össur’s industry is growing steadily which is giving Össur opportunity to grow. The analysis showed few threats and weaknesses as well. The ones influencing the future growth were changes in reimbursement, currency fluctuations and the fact that Össur may be depend on certain raw materials.
Followed by the strategic analysis, financial analysis was made to estimate the key financial drivers. It showed that Össur’s profitability has been increasing as well for sales. Profitability analysis and an analysis of both short-term liquidity risk and long term were made which showed result of excellent ability to pay future obligations.
The valuation of Össur was then performed by using the Discounted Cash Flow (DCF) model and also the Economic Value Added model (EVA). Both models showed similar results, a share price of 28.3 DKK and 28.8 DKK on the 9thof February 2019. Compared to the value of 31.1 DKK on November 28th2018. A Sensitivity analysis was performed in the end to see how sensitive the stock price is to changes in growth and risk. The analysis reviled that stock price is more sensitive to changes in WACC than to changes in growth rate.
Therefore, I conclude Össur’s share price being under value.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final ThesisMSc in Economics and Business Administration, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages76