When Will Insmed Incorporated (NASDAQ:INSM) Turn A Profit?

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Insmed Incorporated’s (NASDAQ:INSM): Insmed Incorporated, a global biopharmaceutical company, focuses on the development and commercialization of therapies for patients with serious and rare diseases. The US$2.2b market-cap posted a loss in its most recent financial year of -US$324.3m and a latest trailing-twelve-month loss of -US$329.9m 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.

Check out our latest analysis for Insmed

Consensus from the 8 Biotechs analysts is INSM is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$216m in 2022. INSM is therefore projected to breakeven around 3 years from today. In order to meet this breakeven date, I calculated the rate at which INSM must grow year-on-year. It turns out an average annual growth rate of 68% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGS:INSM Past and Future Earnings, June 18th 2019
NasdaqGS:INSM Past and Future Earnings, June 18th 2019

I’m not going to go through company-specific developments for INSM given that this is a high-level summary, however, bear in mind that by and large 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.

One thing I would like to bring into light with INSM is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in INSM’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on INSM, so if you are interested in understanding the company at a deeper level, take a look at INSM’s company page on Simply Wall St. I’ve also put together a list of important factors you should further research:

  1. Valuation: What is INSM 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 INSM 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 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.