Intra-Cellular Therapies Investors Score Big Today

Shares of Intra-Cellular Therapies (ITCI) jumped 14.34 % during today's afternoon session, bringing their 52 week performance to -22.89%. The stock seems to be overvalued in terms of traditional metrics, with mixed growth prospects and negative market sentiment.

Intra-Cellular Therapies, Inc., a biopharmaceutical company, develops new drugs for the treatment of neuropsychiatric and neurological diseases and other central nervous system (CNS) disorders in the United States. The mid-cap Health Care company is based in New York, United States.

ITCI Has a Higher P/E Ratio Than the Sector Average

Compared to the Health Care sector's average of 24.45, Intra-Cellular Therapies has a trailing twelve month price to earnings (P/E) ratio of -19.84 and an expected P/E ratio of -71.1. The P/E ratios are calculated by dividing the company's share price by its trailing 12 month of $-2.76 or forward earnings per share of $-0.77.

Earnings represent the net profits left over after subtracting costs of goods sold, taxes, and operating costs from the company's recorded sales revenue. One way of looking at the P/E ratio is that it represents how much investors are willing to pay for every dollar's worth of the company's earnings. Since Intra-Cellular Therapies's P/E ratio is higher than its sector average of 24.45, we can deduce that the market is overvaluing the company's earnings.

Intra-Cellular Therapies Is Fairly Valued in Terms of Expected Growth

Another factor pointing to Intra-Cellular Therapies's value is its PEG ratio of 0.0. This is the stock's price to earnings ratio divided by its estimated earnings growth rate. If the resulting ratio is near or lower than 1 -- but higher than 0 -- its indicates that the company is faitly valued in terms of expected growth.

ITCI Has an Alarming P/B Ratio

The price to book (P/B) ratio of a company is a comparison of the company's market capitalization versus its net asset, or book value. A ratio lower than 1 tells you that the equity market is undervaluing the book value of the company's assets, and ratios higher than 1 tell you that the equity markets are overvaluing the company in terms of its assets.

Of course, a company is worth much more than its assets alone, so the focus on P/B ratio is mainly to enable investors to single out undervalued securities that offer a margin of safety. Since Intra-Cellular Therapies's P/B ratio of 7.29 is higher than its sector average of 4.16, such a margin of safety does not exist for the stock.

ITCI Is Generating Cash

Intra-Cellular Therapies has decent free cash flows. This represents the actual cash that the company is generating from its sales revenues, minus its re-investments in the business (capital expenditures). The company's operating cash flows have an average growth rate of -21.0%, compared to 35.61% for capital expenditures. From the table below we can also see that the free cash flows has an average growth rate of -20.93% and a coefficient of variability of 36%:

Date Reported Cash Flow from Operations (k) Capital Expenditures (k) Free Cash Flow (k) YoY Growth
2022-12-31 -$270,186 $778 -$270,964 -4.27%
2021-12-31 -$259,544 $326 -$259,870 -12.82%
2020-12-31 -$230,073 $267 -$230,340 -79.0%
2019-12-31 -$127,983 $700 -$128,684 -8.54%
2018-12-31 -$118,169 $391 -$118,560 n/a

Intra-Cellular Therapies Is Not a Profitable Business

If you are looking to make ITCI a long term investment, its weak margins may give you cause for concern. As you can see from the below, the company is generally losing money on each sale it makes. That being said, stock prices in the short term can be independent of a company's margins, and Intra-Cellular Therapies's management may be able to make the business profitable in the future.

We See Negative Market Signals Regarding ITCI

At today's price of $54.74 per share, Intra-Cellular Therapies is -23.09% away from its target price of $71.18, and on average, analysts give the stock a rating of buy.3.15% of the company's shares are linked to short positions, and 93.97% of the shares are owned by institutional investors.

Date Reported Holder Percentage Shares Value
2022-12-31 FMR, LLC 13% 12,028,790 $659,779,113
2022-12-31 Vanguard Group, Inc. (The) 9% 8,319,249 $456,310,794
2022-12-31 Blackrock Inc. 8% 7,450,161 $408,641,319
2022-12-31 Wellington Management Group, LLP 6% 5,409,685 $296,721,213
2022-12-31 Wasatch Advisors Inc 5% 4,740,145 $259,996,946
2022-12-31 Bellevue Group AG 4% 3,342,236 $183,321,639
2022-12-31 AllianceBernstein, L.P. 2% 2,013,747 $110,454,019
2022-12-31 State Street Corporation 2% 1,995,003 $109,425,911
2022-12-31 Franklin Resources, Inc. 2% 1,793,456 $98,371,058
2022-12-31 Invesco Ltd. 2% 1,776,031 $97,415,297
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.