Loss-Making Neurocrine Biosciences Inc (NASDAQ:NBIX) Expected To Breakeven
Neurocrine Biosciences Inc’s (NASDAQ:NBIX): Neurocrine Biosciences, Inc. discovers and develops pharmaceuticals for the treatment of neurological and endocrine-related diseases and disorders in the United States. The US$7.85B market-cap company announced a latest loss of -US$142.54M on 31 December 2017 for its most recent financial year result. As path to profitability is the topic on NBIX’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for NBIX, its year of breakeven and its implied growth rate.
Check out our latest analysis for Neurocrine Biosciences
Expectation from analysts is NBIX is on the verge of breakeven. They expect the company to post a final loss in 2018, before turning a profit of US$168.03M in 2019. NBIX is therefore projected to breakeven around a few months from now. How fast will NBIX have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 53.99% 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.
Given this is a high-level overview, I won’t go into detail the detail of NBIX’s upcoming projects, but, keep in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. 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 NBIX is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in NBIX’s case is 99.32%. 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 NBIX, so if you are interested in understanding the company at a deeper level, take a look at NBIX’s company page on Simply Wall St. I’ve also put together a list of key aspects you should look at:
Valuation: What is NBIX 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 NBIX 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 Neurocrine Biosciences’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.
