I had a basic crack at figuring out a SP estimate when P&G announcement was made in May for all their product lines. I've cut and pasted below however you all figures are very rubbery. You could make a case for much better but I've tried to be conservative, and don't forget this doesn't include other deals with other partners likely in the future:
P&G have announced 3 deals and 4 others in the pipe works with OBJ with exclusive world wide rights across their 7 major platforms of sales. So how do we value this? Well first P&G are currently valued around $220B so it is a big fish. It's sales for the seven major platforms are well over $10B out of over $25B in sales for this division (beauty products) but we will round it down to that to be conservative. Olay itself is around the $3B mark which is just over 10% of sales in this area, so I think that $3B is a good starting figure of sales where our royalties will come from. OBJ will only relate to certain products so say their tech is in 25% of the $3B figure. We are left with around $750M per annum. The royalty rate is usually between 1% to 5% and will commonly have an upfront payment attached to it. Disregarding the upfront payment and costs OBJ will incur (P&G already state they will cover costs in the announcement) you would exclusive rights would attract a royalty percentage higher than average. I will assume 3%. This equates to royalties per annum of $22.5M. I will again round it down to $20M conservatively. With a P/E of between 10 to 20 (10 being slow growth and 20 being strong growth) this should have a market cap worst case of between $200M to $400M. This means the stock price should fall between about $0.14 to $0.28. This will probably be medium term when actual figures become apparent and the market doesn't have to wildly speculate like I am.
OBJ Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
(20min delay)