Valuation Scorecard: Stock Rating D-Negative (3/27/24)-Vericel Corp (VCEL).


At the current price of $52, what is the market’s view of Vericel’s future operating performance? To achieve average annual stock market performance of 9.0% over the next 6 years, Vericel shares will need to reach $88. To achieve Upper quartile performance, Vericel’s stock price will need to reach $103 by 2029.

Executive Summary

  • Key Vericel characteristics: high expected growth, high profitability, stability, and above average financial strength. A big positive influence on Vericel’s valuation is its superior Growth.
  • Very high valuation, leading shareholder returns. Current valuation levels are very high relative to the Vericel Peer Group. Recent market returns have significantly outperformed the Vericel Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Vericel shares should reach a level of $21 by 2029 — an -13.9% per year total shareholder return. A 2029 stock price of $88 would reflect median performance and a price of $103 would be required to reach upper quartile performance.
  • Growth has been Vericel’s biggest valuation strength. Historical growth has been very high relative to the Vericel Peer Group and forecasted growth is relatively very high. Asset Growth, and Equity Growth have been superior. These factors have buoyed market perceptions of Vericel. Vericel’s historical income statement growth has been in line with balance sheet growth. Revenue growth has paralleled asset growth; earnings growth has paralleled equity growth and return on equity has been stable.
  • Pretax ROA, Pretax Margin, and Asset Turnover are group leading. These factors have strengthened market perceptions of Vericel. The company has high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
  • Vericel’s risk profile is favorable. Overall variability has been relatively low with relatively low revenue variability, very low E.P.S. variability, and above average stock price volatility. Financial Strength is only average and earnings’ expectations are relatively high. The debt/capital ratio has declined.

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