Insmed Incorporated’s (NASDAQ:INSM): Insmed Incorporated, a biopharmaceutical company, focuses on the development and commercialization of therapies for patients with rare diseases. The company’s loss has recently broadened since it announced a -US$192.65M loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$223.76M, moving it further away from breakeven. Many investors are wondering the rate at which INSM will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for INSM’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering INSM, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$118.10M in 2021. Therefore, INSM is expected to breakeven roughly 3 years from today. How fast will INSM have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 64.37% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, INSM may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for INSM given that this is a high-level summary, though, keep 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one issue worth mentioning. INSM currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in INSM’s case is 69.61%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are too many aspects of INSM to cover in one brief article, but the key fundamentals for the company can all be found in one place – INSM’s company page on Simply Wall St. I’ve also compiled a list of key factors you should further research:
- Historical Track Record: What has INSM’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Insmed’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.