Market Sentiment Around Loss-Making Insmed Incorporated (NASDAQ:INSM)

Insmed Incorporated’s (NASDAQ:INSM): Insmed Incorporated, a biopharmaceutical company, focuses on the development and commercialization of therapies for patients with rare diseases. The US$2.14B market-cap posted a loss in its most recent financial year of -US$192.65M and a latest trailing-twelve-month loss of -US$223.76M leading to an even wider gap between loss and breakeven. The most pressing concern for investors is INSM’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for INSM.

See our latest analysis for Insmed

INSM is bordering on breakeven, according to analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$118.10M in 2021. INSM is therefore projected to breakeven around 3 years from now. What rate will INSM have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 64.37%, which is rather optimistic! If this rate turns out to be too aggressive, INSM may become profitable much later than analysts predict.

NasdaqGS:INSM Past Future Earnings Jun 4th 18
NasdaqGS:INSM Past Future Earnings Jun 4th 18

Underlying developments driving INSM’s growth isn’t the focus of this broad overview, though, keep in mind that generally 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 I wrap up, there’s one issue worth mentioning. INSM currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in INSM’s case is 69.61%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of INSM which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at INSM, take a look at INSM’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further examine:

  1. Historical Track Record: What has INSM’s 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.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Insmed’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.