When Will Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) Turn A Profit?

Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Intercept Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the development and commercialization of therapeutics to treat progressive non-viral liver diseases in the United States, Europe, and Canada. The US$478m market-cap company’s loss lessened since it announced a US$175m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$159m, as it approaches breakeven. As path to profitability is the topic on Intercept 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.

View our latest analysis for Intercept Pharmaceuticals

Consensus from 16 of the American Biotechs analysts is that Intercept Pharmaceuticals is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$105m in 2024. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 56% year-on-year, on average, 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 Intercept Pharmaceuticals given that this is a high-level summary, but, bear 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 we wrap up, there’s one issue worth mentioning. Intercept Pharmaceuticals currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Intercept Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Intercept Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

1. Valuation: What is Intercept Pharmaceuticals 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 Intercept Pharmaceuticals 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 Intercept Pharmaceuticals’s board and the CEO’s background.
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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.