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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, engages in the discovery and development of small molecule drugs for the treatment of immune and hematologic disorders, cancer, and rare diseases. The US$407m market-cap company’s loss lessened since it announced a US$67m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$25m, as it approaches breakeven. Many investors are wondering about the rate at which Rigel Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 6 industry analysts covering Rigel Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$2.4m in 2022. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 78% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Rigel Pharmaceuticals given that this is a high-level summary, however, 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.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 31% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Rigel Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Rigel Pharmaceuticals' company page on Simply Wall St. We've also put together a list of key factors you should further research:
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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