Incyte, a biopharmaceutical company, has seen its stock price decline to $58 per share, 43% below its peak level of $100 in January 2021. The stock was trading at around $76 in early June 2022 before the Fed started increasing rates, and is now 24% below that level. The company’s performance during the turbulent market conditions of 2022 is compared to its performance during the 2008 recession.
Investor concerns about a significant fall in sales after Incyte’s top-selling drug, Jakafi, loses market exclusivity in 2028 have weighed down INCY stock. The stock saw an 8% rise after the company’s board approved a $2 billion share buyback plan, providing some confidence to investors. INCY stock has faced a notable decline of 30% from early 2021 levels, while the S&P 500 saw an increase of about 40% over the same period.
Beating the S&P 500 has been challenging for individual stocks in recent years, even for companies in the health care and tech sectors. The Trefis High Quality Portfolio, consisting of 30 stocks, has outperformed the S&P 500 each year over the same period, providing better returns with less risk. There is uncertainty about INCY’s performance in the current macroeconomic environment with high oil prices and elevated interest rates.
During the recent inflation shock of 2022, INCY stock trends were compared to those of the broader market during the 2007-2008 crisis. The company’s revenue increased from $2.7 billion in 2020 to $3.7 billion in 2023, driven by sales of Jakafi and Opzelura. Incyte’s fundamentals seem strong with a large cash balance and minimal debt, positioning the company well to weather the ongoing inflation shock.
While INCY stock has the potential for more gains once fears of a potential recession are allayed, the patent cliff in 2028 remains a key concern. The company’s strong cash position can be used for inorganic growth to offset the decline in Jakafi sales post-2028. Incyte also has several products in pivotal stages, indicating potential for organic growth. It is important to compare Incyte’s performance with its peers to get a better understanding of its market position and future prospects.
