With the business potentially at an important milestone, we thought we'd take a closer look at Rigel Pharmaceuticals, Inc.'s (NASDAQ:RIGL) future prospects. Rigel Pharmaceuticals, Inc., a biotechnology company, engages in the discovery and development of small molecule drugs for the treatment of immune and hematologic disorders, cancer, and rare diseases. With the latest financial year loss of US$67m and a trailing-twelve-month loss of US$28m, the US$763m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Rigel Pharmaceuticals' 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.
Rigel Pharmaceuticals is bordering on breakeven, according to the 5 American Biotechs analysts. They expect the company to post a final loss in 2022, before turning a profit of US$58m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% 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 Rigel Pharmaceuticals' growth isn’t the focus of this broad overview, but, bear in mind 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 we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 39% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of Rigel Pharmaceuticals 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 Rigel Pharmaceuticals, take a look at Rigel Pharmaceuticals' company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:
- Historical Track Record: What has Rigel Pharmaceuticals' 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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rigel Pharmaceuticals' board and the CEO’s background.
- 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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