We've been asking ourselves recently if the market has placed a fair valuation on Incyte. Let's dive into some of the fundamental values of this Large-Cap Health Care company to determine if there might be an opportunity here for value-minded investors.
an Increase in Expected Earnings Improves Its Value Outlook but Its Shares Are Expensive:
Incyte Corporation, a biopharmaceutical company, engages in the discovery, development, and commercialization of therapeutics in the United States, Europe, Canada, and Japan. The company offers JAKAFI (ruxolitinib) for the treatment of intermediate or high-risk myelofibrosis, polycythemia vera, and steroid-refractory acute graft-versus-host disease; MONJUVI (tafasitamab-cxix)/MINJUVI (tafasitamab) for treating relapsed or refractory diffuse large B-cell lymphoma; PEMAZYRE (pemigatinib), a selective fibroblast growth factor receptor kinase inhibitor for the treatment of unresectable biliary tract cancer, metastatic cholangiocarcinoma, and myeloid/lymphoid neoplasms; ICLUSIG (ponatinib), a kinase inhibitor to treat chronic myeloid leukemia and Philadelphia-chromosome positive acute lymphoblastic leukemia; ZYNYZ (retifanlimab-dlwr) to treat adults with metastatic or recurrent locally advanced Merkel cell carcinoma; and NIKTIMVO (axatilimab-csfr) for treating chronic graft-versus-host disease, as well as OPZELURA (ruxolitinib) cream for treating atopic dermatitis. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 22.94 and an average price to book (P/B) ratio of 3.19. In contrast, Incyte has a trailing 12 month P/E ratio of 20.8 and a P/B ratio of 4.09.
Incyte has moved 32.7% over the last year compared to 14.2% for the S&P 500 — a difference of 18.5%. Incyte has a 52 week high of $92.86 and a 52 week low of $53.56.
Wider Gross Margins Than the Industry Average of 58.93%:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,159 | $2,667 | $2,986 | $3,395 | $3,696 | $4,241 |
| Gross Margins | 95% | 95% | 95% | 94% | 93% | 93% |
| Net Margins | 21% | -11% | 32% | 10% | 16% | 1% |
| Net Income (M) | $447 | -$296 | $949 | $341 | $598 | $33 |
| Net Interest Expense (M) | $2 | $2 | $2 | $3 | $3 | $1 |
| Depreciation & Amort. (M) | $32 | $30 | $36 | $68 | $83 | $66 |
| Diluted Shares (M) | 219 | 221 | 222 | 224 | 226 | 211 |
| Earnings Per Share | $2.05 | -$1.36 | $4.27 | $1.52 | $2.65 | $0.15 |
| EPS Growth | n/a | -166.34% | 413.97% | -64.4% | 74.34% | -94.34% |
| Avg. Price | $81.98 | $88.81 | $77.93 | $74.54 | $62.79 | $88.15 |
| P/E Ratio | 39.41 | -65.3 | 18.12 | 48.72 | 23.52 | 550.94 |
| Free Cash Flow (M) | $633 | -$312 | $568 | $892 | $496 | $333 |
| CAPEX (M) | $78 | $187 | $181 | $78 | n/a | $3 |
| Current Ratio | 4.83 | 3.74 | 3.65 | 3.54 | 3.75 | 1.97 |
Incyte has rapidly growing revenues and decreasing reinvestment in the business, wider gross margins than its peer group, and a decent current ratio of 1.97. However, the firm suffers from declining EPS growth and positive cash flows.
