I am currently prepping for aninterview and am working on a stock pitch. I'm looking at an ER report for a small-cap growth company with negative EPS, but positive . The report states the valuation method for setting the Price Target to be 10x 2013E EBITDA of 52mm, PT: $9. I realized to get to the $9, you divide Revenue by Shares Outstanding (63mm) to get ~$9.
I am wondering what is the methodology behind setting the Price Target to essentially Revenue per Share? Is Rev per share a good proxy for stock price, given the company has a negative EPS and is growing?
I am just trying to clarify this so I can better explain my stock pitch for the interview. Thanks in advance.