Lipocine Inc’s (NASDAQ:LPCN): Lipocine Inc., a specialty pharmaceutical company, focuses on the development of pharmaceutical products in the area of men’s and women’s health. With the latest financial year loss of -US$20.98M and a trailing-twelve month of -US$18.84M, the US$26.58M market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is LPCN’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for LPCN.
According to the industry analysts covering LPCN, breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$12.98M in 2020. LPCN is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, I calculated the rate at which LPCN must grow year-on-year. It turns out an average annual growth rate of 66.67% is expected, which is rather optimistic! If this rate turns out to be too aggressive, LPCN may become profitable much later than analysts predict.
Underlying developments driving LPCN’s growth isn’t the focus of this broad overview, though, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing I would like to bring into light with LPCN is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in LPCN’s case is 60.37%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of LPCN which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at LPCN, take a look at LPCN’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:
- Valuation: What is LPCN 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 LPCN 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 Lipocine’s board and the CEO’s back ground.
- 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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.