Lipocine Inc. (NASDAQ:LPCN): Are Analysts Optimistic?

Lipocine Inc. (NASDAQ:LPCN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lipocine Inc., a clinical-stage biopharmaceutical company, focuses on the development of pharmaceutical products for the treatment of metabolic and endocrine disorders. With the latest financial year loss of US$13m and a trailing-twelve-month loss of US$20m, the US$145m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Lipocine's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Lipocine

Lipocine is bordering on breakeven, according to the 3 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$17m in 2022. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 53% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Lipocine's growth isn’t the focus of this broad overview, however, keep in mind that typically pharmaceuticals, 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.

One thing we would like to bring into light with Lipocine is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Lipocine's case is 44%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Lipocine'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 Lipocine'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. 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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