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Lipocine Inc (NASDAQ:LPCN): Are Analysts Optimistic?

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. The US$30m market-cap company’s loss lessens since it announced a -US$21.0m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$13.8m, as it approaches breakeven. The most pressing concern for investors is LPCN’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for LPCN, its year of breakeven and its implied growth rate.

Check out our latest analysis for Lipocine

According to the 4 industry analysts covering LPCN, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$13m in 2021. Therefore, LPCN is expected to breakeven roughly 3 years from now. How fast will LPCN 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 59% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, LPCN may become profitable much later than analysts predict.

NasdaqCM:LPCN Past Future Earnings November 22nd 18

Underlying developments driving LPCN’s growth isn’t the focus of this broad overview, however, bear in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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 87%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of LPCN to cover in one brief article, but the key fundamentals for the company can all be found in one place – LPCN’s company page on Simply Wall St. I’ve also put together a list of key factors you should look at:

  1. 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.
  2. 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.
  3. 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.