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We feel now is a pretty good time to analyse Rigel Pharmaceuticals, Inc.'s (NASDAQ:RIGL) business as it appears the company may be on the cusp of a considerable accomplishment. Rigel Pharmaceuticals, Inc., a biotechnology company, discovers and develops small molecule drugs to treat hematologic disorders, cancer, and rare immune diseases. The US$591m market-cap company announced a latest loss of US$30m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Rigel Pharmaceuticals' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 5 of the American Biotechs analysts is that Rigel Pharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$32m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% 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.
Underlying developments driving Rigel Pharmaceuticals' growth isn’t the focus of this broad overview, but, take into account that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. 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. Rigel Pharmaceuticals currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Rigel Pharmaceuticals' case is 58%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of Rigel Pharmaceuticals which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Rigel Pharmaceuticals, take a look at Rigel Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of key factors you should look at:
Historical Track Record: What has Rigel Pharmaceuticals' 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 Rigel Pharmaceuticals' 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.
This article by Simply Wall St is general in nature. 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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