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About Neurocrine Biosciences
You know, I knew I was missing something in my stock analyzing life; I haven’t analyzed a biopharmaceutical company in a while.
And being that top hedge funds such as Soros Fund Management, Renaissance Technologies, Point72 and AQR Capital Management most recently (according to their latest 13F filings) reported stakes in the company in question today, Neurocrine Biosciences, it is just about the right time to get back into the groove of writing about some biotechnology and smaller pharma firms.
Headquartered in San Diego, California, Neurocrine is a biopharma company with an intense concentration in treating different types of all too common neurological diseases and illnesses.
One of the company’s best-selling treatments comes from a drug by the name of Ingrezza (its associated generic name being Valbenazine), which is used to decrease involuntary movements occurring in one’s face, arms, legs and other susceptible body parts, which happens to be a byproduct of Huntington’s disease, which is a genetic disease that, among other effects, degenerates the nerve cells within one’s brain, leading to one’s gradual (or sadly, not-so-gradual in certain instances) loss of control of their bodies as well as the onslaught of other negative impacts such as memory loss, mood swings, depression as well as trouble with making sense of the most basic everyday questions or situations.
Unfortunately, Huntington’s disease is unequivocally on the rise not only within the United States, but all across the globe, which from a strict human perspective is incredibly saddening and concerning, but from the perspective of a potential investor in a company that is focused on helping treat such a disease, I hate to phrase it like this, but it bears a bit of promise, as from the strict and sole perspective of considering an investment in a younger biopharmaceutical company, a potential shareholder is reasonably attracted to a company that has prospects of working on and perhaps largely treating and/or eventually curing and disease that is only impacting more and more people each and every passing day, which more than likely will translate into higher sales and expansion opportunities.
While Neurocrine’s Ingrezza does not completely cure (yet) those with Huntington’s or other similar disorders, perhaps this company has some top-science up its sleeves and can continue finding ways in which its drugs can better help manage symptoms and allow its patients to live less restrictive and happier lives.
Plus, with more drugs in the pipeline awaiting approval and also those in early stages, Neurocrine is seemingly working on ensuring that it is not just a one-drug company, which is yet another net positive.
With this brief bit of introduction relating to Neurocrine Biosciences, allow me to take you through some of this company’s core financial figures in hopes of ultimately determining whether or not this company’s stock (NASDAQ: NBIX) is worth pondering an investment in, not only for the short-term, but for the years and decades to come.
Neurocrine’s stock financials
According to its current market capitalization, Neurocrine Biosciences is a $14.6 billion company with an associated share price of $145.08, no annually distributed dividend offered to its shareholders at the moment and a price-to-earnings (P/E) ratio of 40.52, all of this initially to say that not offering a dividend makes complete and utter sense being that most younger biopharmaceutical companies elect to not drain cash by this means and instead opt to (and really, they must) put all excess cash back into its drugs and the research and development (R&D) thereof, just to stay merely relevant in the hypercompetitive field of biotech and biopharma.
Regarding the company’s present price-to-earnings ratio, shares of Neurocrine Biosciences (NASDAQ: NBIX) seem to technically be trading at a bit of a premium given the commonly held fair value benchmark of 20 rule, however, it is rather tough to make any judgements on this basis because we don’t have any idea as to how quickly this company is growing its annual revenues or how much it is growing in other realms.
But we will momentarily.
Prior to that, however, I’ll take a quick look at the company’s balance sheet and I’ve found that Neurocrine’s executives are in charge of taking care and executing with $3.2 billion in terms of total assets along with just north of $1 billion in terms of total liabilities, which is a stellar overall balance sheet structure and breakdown for a company such as this one, as I presume it to be a company that is growing on the basis of revenues (again, will verify momentarily) and growth almost always requires some debt usage, however, at least for the time being and in recent years, it seems as though Neurocrine’s executives have done just a swell job in maintaining more total assets than liabilities, which is also great on the basis that it can easily continue strategically reinvesting back into its drugs and still not put too much pressure on its balance sheet.
As it relates to the company’s recent annual revenue figures, Neurocrine’s revenues since and during 2019 and 2023 (according to its income statement) have grown each and every year, starting out at a relative base of $788 million in 2019 and steadily but surely climbing up towards its latest reported figure of just a hair under $1.9 billion, telling me that this company has been acquiring more customers over the last handful of years and has also been receiving critical nods of approval from the Food and Drug Administration, or the FDA.
Yet another overall positive surrounding Neurocrine Biosciences.
With respect to the company’s cash flow statement, Neurocrine’s total cash from operations, also during and throughout 2019 and 2023, have also been positive and rising towards the top, which frankly surprised me given that many of the companies in this space I’ve analyzed in the past have just oozed negative net income, yet Neurocrine has carved out a seemingly much better path, with its total cash from operations ranging between $152 million, as reported in 2019 to a relative high of $390 million, as reported and displayed in 2023, hinting at the fact that this company’s ability to turn out some cash and make a (net) profit is fully there.
Neurocrine’s stock fundamentals
On the specific subject of the company’s profitability, Neurocrine Biosciences’ net profit margin, as it is shown on Charles Schwab’s platform, stands at 18.65%, which I deem to be more the start than the finish for this particular enterprise, which, even if I am completely wrong, is a currently more than solid net profit margin.
I mention the bit regarding the start more than the finish since as this company continues expanding and eating up market share within the Huntington’s category, its (net) profit margin will likely expand as well in the long run, which is based upon, among other things, one of the most common facts of life in that speciality drugs such as these can be very, very expensive for end users.
I am not in the business of solely comparing one against the other, but a similar company that just so happens to have a different specialty drug and associated disease treatment is a company I’ve already analyzed by the name of United Therapeutics.
United focuses on treating pulmonary arterial hypertension (PAH), and has been able to carve out a net profit margin of nearly 50%.
Again, I am not saying that this automatically means that Neurocrine will attain the same sort of profitability success, however, I’m just using the company as a sort of reference and loose basis for my previous statement(s).
Should you buy Neurocrine Biosciences stock?
Neurocrine Biosciences is a very necessary company and on a very human level, I truly hope this company continues developing and serving patients across the globe that are suffering from all that Huntington’s has to offer.
In rounding out this stock analysis article from a strict investment lens, Neurocrine Biosciences has a stellar and mighty durable balance sheet, an upward trending income statement on the sole basis of recent total annual revenues, more and more cash flowing into the business each year as well, and while an ownership stake in the company would technically cost someone a pretty premium, upon performing more due diligence on the company’s drugs and when incorporating all of its other financial aspects, it makes the most sense to give this company’s stock (NASDAQ: NBIX) a “buy” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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