Yahoo Finance Intercept Pharmaceuticals, Inc.'s (NASDAQ:ICPT) Shift From Loss To Profit
We feel now is a pretty good time to analyse Intercept Pharmaceuticals, Inc.'s (NASDAQ:ICPT) business as it appears the company may be on the cusp of a considerable accomplishment. Intercept Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the development and commercialization of therapeutics to treat progressive non-viral liver diseases in the United States, Europe, and Canada. The US$449m market-cap company’s loss lessened since it announced a US$175m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$173m, as it approaches breakeven. As path to profitability is the topic on Intercept Pharmaceuticals' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Intercept Pharmaceuticals
According to the 16 industry analysts covering Intercept Pharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$34m in 2024. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Intercept Pharmaceuticals given that this is a high-level summary, however, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one issue worth mentioning. Intercept Pharmaceuticals currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Intercept Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Intercept Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of important factors you should further examine:
Valuation: What is Intercept Pharmaceuticals worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Intercept Pharmaceuticals is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Intercept Pharmaceuticals’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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