Yahoo Finance How Financially Strong Is Immunomedics Inc (NASDAQ:IMMU)?
Stocks with market capitalization between $2B and $10B, such as Immunomedics Inc (NASDAQ:IMMU) with a size of US$4.32b, do not attract as much attention from the investing community as do the small-caps and large-caps. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. Let’s take a look at IMMU’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into IMMU here. View out our latest analysis for Immunomedics
How does IMMU’s operating cash flow stack up against its debt?
IMMU has sustained its debt level by about US$98.08m over the last 12 months – this includes both the current and long-term debt. At this constant level of debt, the current cash and short-term investment levels stands at US$154.90m for investing into the business. Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, though these low levels of cash means that operational efficiency is worth a look. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can examine some of IMMU’s operating efficiency ratios such as ROA here.
Can IMMU meet its short-term obligations with the cash in hand?
With current liabilities at US$122.24m, it appears that the company has been able to meet these obligations given the level of current assets of US$157.30m, with a current ratio of 1.29x. Usually, for Biotechs companies, this is a suitable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Is IMMU’s debt level acceptable?
With total debt exceeding equities, IMMU is considered a highly levered company. This is not uncommon for a mid-cap company given that debt tends to be lower-cost and at times, more accessible. But since IMMU is presently unprofitable, there’s a question of sustainability of its current operations. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.
Next Steps:
IMMU’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. Though, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure IMMU has company-specific issues impacting its capital structure decisions. I suggest you continue to research Immunomedics to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for IMMU’s future growth? Take a look at our free research report of analyst consensus for IMMU’s outlook.
Valuation: What is IMMU worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether IMMU is currently mispriced by the market.
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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
