When Will Insmed Incorporated (NASDAQ:INSM) Become Profitable?

Insmed Incorporated’s (NASDAQ:INSM): Insmed Incorporated, a biopharmaceutical company, focuses on the development and commercialization of therapies for patients with rare diseases. The company’s loss has recently broadened since it announced a -US$193m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$298m, moving it further away from 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.

Check out our latest analysis for Insmed

INSM is bordering on breakeven, according to Biotechs analysts. They expect the company to post a final loss in 2020, before turning a profit of US$226m in 2021. Therefore, INSM is expected to breakeven roughly a few months from now. How fast will INSM have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% 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.

NasdaqGS:INSM Past Future Earnings November 2nd 18
NasdaqGS:INSM Past Future Earnings November 2nd 18

Underlying developments driving INSM’s growth isn’t the focus of this broad overview, however, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. INSM currently has a debt-to-equity ratio of 107%. Typically, debt shouldn’t exceed 40% of your equity, and INSM 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 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 key aspects you should look at:

  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.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.