Target pricing

The very simple 3-D-visualization of price simulation results for competing businesses can foster the understanding of value chain dynamics. Limit and target prices can be determined based on the simulation results. 

Whereas for the pharmaceutical industry the patient, respectively the daily medical cost, is the driving force for establishing the target price for an API, it is the manufacturing cost for the fine-chemical/custom manufacturing company. 

I received an email this morning from a client who has been asked to provide information on potential takeover targets for his company and he asked me how they might go about such a transaction. Their target price was in the range of 50-100 million. While this is not be an unusual request for an adviser in M A to receive, when it is put to someone in business development a series of questions about just why and how the company has made this decision is raised. In order to understand the background to such a request the structures, processes and practices of business development in different company situations needs some examination. 

Many industrial organic acids can be produced by fermentation, such as acetic, citric, and lactic acids. Succinic acid is a dicarboxylic acid of potential industrial interest as a platform chemical (1-3). Separation and purification of succinic acid by adsorption was tested to replace current precipitation methods and their associated waste disposal problems. Succinic acid is a valuable intermediate value chemical with a moderate market. For succinic acid to have an economic and energy impact, it will need to become a commodity chemical intermediate with a much lower price. This target price hasbeen estimated to be between 0.22 and 0.30 / lb ( 0.48- 0.66/kg) and is potentially achievable with advanced technology (1). At this price, succinic acid can be catalytically upgraded into other higher valued chemicals suchastetrahydrofuran, 1,4-butanediol, y-butyrolactone, 2-pyrrolidinone, and N-methylpyrrolidinone. 

In conclusion, the selective conversion of biomass into HMF is still a formidable obstacle after 50 years of study. Due to the modest selectivity, the DSP is too elaborate for a commodity chemical and the target price of 20001-1 [190] is still elusive. 

The exhaustibility of fossil sources at current consumption and production levels, the world s proven reserves of oil, natural gas and coal are expected to be depleted in 42, 64 and 155 years, respectively (lEA, 2006). Although these years left are moving targets, prices will rise substantially when oil fields become more depleted. 

The Alberta scheme has no provisions for a link of any kind to any other emissions trading scheme. The intensity target, price cap and offset credits, which do not have an additionality requirement, are likely to deter other schemes from linking to the Alberta scheme. 

Fundamental approach Focusing on the value of underlying asset therefore, the conversion premium and conversion price at issue is also determined using equity valuation methods or simply by looking the target price estimated in equity research reports (Example 9.3). 

The equity analysts estimate a target price as shown in Table 9.2/... 

Therefore, target prices allow to understand if the conversion price at issue is fair or not. In this case, the range of expected values between 3.9 and 65.3 per share justifies the conversion price of 64.7 per share. Figure 9.18 clarifies what we explain. 

In rising stock markets, beta > 1 benefits from the index appreciation because the probability of rising stock prices and, therefore, to convert the bond will increase. Therefore, a greater beta determines a greater cost of capital and consequently a lower present value of cash flows. This means that the target price of the underlying asset will be lower, reducing the conversion premium. 

An investor follows a strategy that involves going long of a Latin American sovereign bond. The bond is currently yielding 350 bp over the benchmark US Treasury bond. If the sovereign bond falls in price then the investor will purchase it. The investor expects that the target price for the purchase should be when the spread is 400 bp. 

At the beginning of the war DuPont was selling powder to the government for 53c per pound. The Old Hickory contract had a target price of 44.5c per pound. 

As shown in Table III, the BDSA process offers significant advantages in two primary areas. First, the process has a significantly lower estimated production cost for BDO, succinic acid, and several other commodity chemicals, as well as lower energy consumption during production. Current com production could easily supply the 100 to 200 hundred million pounds of com sugar required for each major chemical plant, and use of this feedstock would decrease petroleum consumption and imports. Further analysis by ACC and New Horizon of the production cost for succinic acid in our fermentation process has included several process modifications to further decrease costs. The estimated costs in 1998 were 0.20/lb sodium succinate. However, the petrochemical routes to BDO have also had further improvements, increased capacity and presumably lowered the target price. 

In their recent research Munda and Strasek [1, 2] observed characteristics of the Target-to-Real-Price ratio (TRP ratio) using 5-year timeline of 30 individual stocks across the Europe (developed and developing markets). They concluded that individual stocks have their unique mean-reverted values of the ratio between the stock s 6-months consensus target price from Bloomberg and the respective spot price. 

The third stage of the adjusted BL method is unique and represents the highest added value of the article. We use publically available information about the analysts target prices to calculate adjusted views about the market returns. This enables us to calculate the view-adjusted market returns in the next stage of the BL procedure. 

We start the third stage by collecting daily target prices and the actual stock prices for individual stocks, included in the benchmark portfolio. We then calculate... 

It is constructive to consider the optimistic cost of hydrogen produced today using PEC compared with the target prices. In this calculation, typical values of photocurrent for modified iron oxide of 2 mA/cm at 1 Sun illumination with a bias of 1.2 Volts have been used and costs for 17% efficient PV at 2/W peak incorporated. Clearly, the cost of hydrogen per kg produced is dependent on the location and a site in Southern Spain has been assumed with an averaged monthly insolation of 4.8 kWh/m /day. To produce 1 kg of hydrogen per day would require some... 

This cost of 20/kg is clearly too high and around a factor of 10 greater than the target price and does not include additional costs of land, maintenance, installation, transport, the balance of plant costs, and profit. Clearly, an improvement in PEC efficiency would be advantageous to limit the land usage. This suggests that significant improvements in performance of the PEC device are required to meet commercial demands. 

The price is only indicative since it significantly depends on the degree of processing and treatment as well as final customer/application area. The target price for needle-like clays as nanofUlers could be in the range of 3-4 /kg, compared with the 5-18 /kg for organically modified MMT [21,22]. 

Bidder Support in Auctions - Manugistics NetWORKS Target Pricing ... 

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