IMMU Stock Forecast: Win with a wise pick in the pharmaceutical industry

motek 1The IMMU stock forecast article was written by Chloe Peng, Analyst at I Know First. Master of Science of Finance candidate at Brandeis University.


  • Though the clinical trials were influenced by the COVID-19 early this year, IMMU’s main product was approved in April by FDA, causing stock price to jump almost 30% instantly.
  • There are many opportunities facing the company, for example, the market for breast cancer drug is expanding with a growth rate of around 10%.
  • I believe the company’s revenue will triple in the next year and suggest you to buy the stock.
(Source: Seeking Alpha)

Company Background

Immunomedics is a clinical-stage biopharmaceutical company developing monoclonal antibody-based products for the targeted treatment of cancer. The company’s product candidate is sacituzumab govitecan (IMMU-132), an antibody-drug conjugate (ADC) that has received approval from the U.S. Food and Drug Administration (FDA) for the treatment of patients with metastatic triple-negative breast cancer who previously received at least two prior therapies for metastatic disease. The metastatic TNBC is a subset of breast cancer exhibiting an aggressive and early pattern of metastases, a relative lack of therapeutic targets, and a poor prognosis compared with other breast cancer subtypes. The stock price jumped by almost 30% when the news was announced on April 22, 2020.

(Source: Celebrity Equity, IMMU at American Society of Clinical Oncology meeting)

The FDA has also granted sacituzumab govitecan fast track designation, designed to expedite the development and review of applications for products for the treatment of a serious or life-threatening disease or condition, for the same indication and for patients with non-small cell lung cancer or small-cell lung cancer (SCLC). Moreover, the company has many other candidates under different stages of clinical trials and developments. The company’s other candidates are shown in the following graph extracted from the company’s website.

Strengths, Weaknesses, Opportunities And Threats Of IMMU

The following tables shows you a summary of the strengths, weaknesses, opportunities and threats for IMMU.


IMMU has many strengths for example, high customer satisfaction. The company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.

Also, IMMU is investing huge resources in training and development of its employees resulting in a workforce that not only highly skilled but also very motivated.


The company is not doing financial planning very efficiently. It has much cash on its balance sheet, showing that IMMU can make better use of internal financial resources than what it’s doing at present.

Moreover, although IMMU is spending above industry average on research and development, it hasn’t been able to compete with the leading players in the industry in terms of innovation. It has the feature of a mature firm looking to bring out products based on tested characters in the market.


IMMU is facing many opportunities, for example, the market it operates in is growing fast. The company targets on treatments of breast cancer, a cancer that affects the most females in the world, causes the second most cases of death among females in US. It can develop due to reasons such as reduced breast feeding, rise in age of childbearing, undergoing estrogen modifying drug treatments and high intake of oral contraceptive pills. See following chart of female death cases in the US sorted by cancer type.

(Source: Statista)

The increase in the number of women complaining of such problems and the successive rise in the number of breast cancer cases are factors boosting the global market for breast cancer therapeutics during the forecast period. Moreover, due to life style changes, the percentage of obesity is increasing year by year, leading to more breast cancer patients.

US is leading the technology and skills to treat breast cancer, with a well-established healthcare infrastructure in place. Besides, many biotech companies are developing new drugs, for example, Immunomedics, Seattle Genetics and MacroGenics. Also, governments of developed nations such as Canada and the U.S. are providing health insurance for cancer diagnostics. Spurred by these factors the Breast Cancer Therapeutics Market is likely to flourish in US to emerge dominant. Analyst estimates a CAGR of around 10% for breast cancer drugs until 2026. The newly-approved drug developed by IMMU is surely going to grow with the market in the next few years.


According to the research by Manpower Group, attracting and retaining skilled workers has become a challenging affair as 54 per cent of companies globally reported talent shortages, the highest in over a decade. The problem can be threat to steady growth of revenue for IMMU.

Besides, growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributor. Thus, selling costs will increase and profit will be hurt.

All in all, I believe that IMMU’s strengths outweighs weaknesses and I’m confident with its ability to seize opportunities and manage threats.

Higher risk, higher return

(Source: Yahoo Finance)

I know that you may be concerned with the company’s negative net income because normally you expect your targeted companies to have promising net income. But the nature of IMMU‘s business makes this reasonable because developing drugs needs huge amount of initial investment, or R&D cost, which under US accounting treatment, is recognized all as expenses.

When you look at the following table, you see that the high R&D cost attributes to most of the total costs. The company’s cost structure is therefore acceptable because the costs are mostly used to generate future cash inflows.

(Source: 2019 IMMU Annual Report)

Only when the drug is approved by FDA, will the company start to earn revenue and thus profit. What’s good about IMMU is that, they produce the drugs themselves, meaning that the time lag between FDA approval and revenue stream is shorter than if they use 3rd-party producer.

This situation with biotech companies is further verified by IMMU’s competitors, Seattle Genetics and MacroGenics, who are also US biotech firms developing breast cancer drugs. You can see from the following graph that all the 3 firms have negative net income due to high R&D costs, though the 2 competitors have higher revenue due to products already in place.

(Source: Craft Co)

I admit that investing in an unprofitable company means higher risks than profitable companies, but it’s a good investment as long as the return compensates the risks taken.

In healthcare industry, there are also many companies earning stable and positive incomes, for example, healthcare giant Amgen. We can see from the graph below that IMMU is relatively more volatile than its peers, but generates higher returns. The vertical axis measures the performance since the first analysis date May 24, 2019 of the 10 stocks presented in the table on page 2, while the horizontal axis measures the 12-month annualized volatility. The bubbles are sized according to market capitalization, and their colors indicate the overall rating (Global Valuation, Green is better than yellow).

(Source: TheScreener)

Satisfying Future Potential

IMMU is still very likely to have negative earnings in the next few years due to high cost on ongoing clinical trials and drug developments. But I’m confident with its revenue growth in future years from sales of the new drugs. Analysts estimate that IMMU’s revenue is likely to triple in 2021. See the table below.

(Source: Yahoo Finance)

Besides, the company currently has a D/E ratio of 1.53, meaning that it is mostly debt-financed. With growing revenue, IMMU will have the chance to further pay back the bank loans, reduce interest costs and fund future research and experiment costs.

Wall street gave positive IMMU stock forecast as well, see the chart below.

(Source: WSJ)


IMMU’ s stock jumped almost 30% after its breast cancer drug was approved by FDA, showing a sign of promising future revenue potential. Moreover, I looked into the company’s strengths, weaknesses, opportunities and threats and I’m confident with the company’s ability to fully use its strength and catch trends. Although the company currently has negative net earnings due to the nature of the business, I believe it can produce drugs very fast and with the fast-growing market, it can triple its revenue in 2021.

Moreover, my high enthusiasm for IMMU is also due to its stock’s bullish one-year IMMU stock forecast from I Know First. The predictive AI algorithm of I Know First gave IMMU a one-year forecast of 438.27. This score is a clear bullish signal for IMMU.

Past Successful I Know First IMMU Stock Forecast

On April 21, 2020, I Know First Algorithm gave very bullish IMMU stock forecast, which ranked as one of the top performing predictions with a return of 58.93%. The predictabilities also showed strong confidence that IMMU stock price was very likely to soar, which was in accordance the actual stock performance. IMMU has risen 58.93% in the forecasting time period. See charts below.

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