How Does Incyte Stock’s Decline During The 2022 Inflation Shock Compare With The 2008 Crash?

INCY: Incyte logo

The stock price of Incyte (NASDAQ:INCY), a biopharmaceutical company, trades at $58 per share, about 43% below its peak level of $100 seen in January 2021. INCY stock was trading at around $76 in early June 2022, just before the Fed started increasing rates, and is now 24% below that level, compared to a substantial 38% gain for the S&P 500 during this period. Our detailed analysis of Incyte’s upside post-inflation shock captures trends in the company’s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock’s performance during the 2008 recession.

INCY stock has been weighed down in the recent past due to rising investor concerns of a significant fall in sales after its top-selling drug – Jakafi – loses market exclusivity in 2028. INCY stock did see an 8% rise on Monday, May 13, after the company’s board approved a $2 billion share buyback plan, giving some confidence to the investors.

Looking at a slightly longer term, INCY stock has faced a notable decline of 30% from levels of $85 in early January 2021 to around $60 now, vs. an increase of about 40% for the S&P 500 over this roughly three-year period. However, the decrease in INCY stock has been far from consistent. Returns for the stock were -16% in 2021, 9% in 2022, and -22% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 — indicating that INCY underperformed the S&P in 2021 and 2023.

In fact, consistently beating the S&P 500 — in good times and bad — has been difficult over recent years for individual stocks; for heavyweights in the Health Care sector including LLY, UNH, and JNJ, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could INCY face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months — or will it see a recovery? From a valuation perspective, INCY stock looks like it can see higher levels. It currently trades at 3.3x revenues, versus a 4.9x average over the last three years. Our Incyte (INCY) Valuation Ratios Comparison dashboard has more details.

2022 Inflation Shock
Timeline of Inflation Shock So Far:

  • 2020 – early 2021: Increase in money supply to cushion the impact of lockdowns led to high demand for goods; producers unable to match up.
  • Early 2021: Shipping snarls and worker shortages from the coronavirus pandemic continue to hurt supply.
  • April 2021: Inflation rates cross 4% and increase rapidly.
  • Early 2022: Energy and food prices spike due to the Russian invasion of Ukraine. Fed begins its rate hike process.
  • June 2022: Inflation levels peak at 9% – the highest level in 40 years. The S&P 500 index declined more than 20% from peak levels.
  • July – September 2022: Fed hikes interest rates aggressively – resulting in an initial recovery in the S&P 500 followed by another sharp decline.
  • October 2022 – July 2023: Fed continues rate hike process; improving market sentiments helps S&P500 recoup some of its losses.
  • Since August 2023: Fed has kept interest rates unchanged to quell fears of a recession, and it is prepared for rate cuts in 2024.

In contrast, here’s how INCY stock and the broader market performed during the 2007/2008 crisis.

Timeline of 2007-08 Crisis

  • 10/1/2007: Approximate pre-crisis peak in S&P 500 index
  • 9/1/2008 – 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)
  • 3/1/2009: Approximate bottoming out of S&P 500 index
  • 12/31/2009: Initial recovery to levels before accelerated decline (around 9/1/2008)

Incyte and S&P 500 Performance During 2007-08 Crisis

INCY stock declined from $10 in August 2008 (the stock’s pre-crisis peak) to $2 in March 2009 (as the markets bottomed out), implying it lost 77% of its pre-crisis value. It recovered sharply to $9 levels in early 2010, implying a stellar 4x growth between March 2009 and January 2010. The S&P 500 Index saw a decline of 51%, falling from levels of 1,540 in September 2007 (pre-crisis peak) to 757 in March 2009. It then rallied 48% between March 2009 and January 2010 to reach levels of 1,124.

Incyte’s Fundamentals Over Recent Years

Incyte’s revenue increased from $2.7 billion in 2020 to $3.7 billion in 2023, led by an uptick in its blood cancer drug – Jakafi – and Opzelura –a treatment for atopic dermatitis and vitiligo. Atopic dermatitis is a type of eczema, and Vitiligo is a skin condition that causes patches of skin to lose color. Jakafi sales have risen 37% from $1.9 billion in 2020 to $2.6 billion in 2023, while Opzelura sales have surged 3x y-o-y to $338 million in 2023. Opzelura was launched in 2021. The company’s earnings stood at $3.52 on a per-share and adjusted basis in 2023, compared to a loss per share of $0.42 in 2020.

Does Incyte Have A Sufficient Cash Cushion To Meet Its Obligations Through The Ongoing Inflation Shock?

Incyte’s total debt decreased from $47.5 million in 2020 to $38.3 million now, while its cash increased from $1.8 billion to $3.7 billion over the same period. The company also garnered $497 million in cash flows from operations in 2023. Incyte has a very little amount of debt and a large cash balance, making the company sound from a financial risk perspective.


With the Fed’s efforts to tame runaway inflation rates helping market sentiments, we believe INCY stock has the potential for more gains once fears of a potential recession are allayed. While its top-line is expected to benefit from market share gains for its cancer and atopic dermatitis drugs, the patent cliff in 2028 remains a key concern. The company has good cash in hand that can be used to explore inorganic growth to counter the decline in Jakafi sales post 2028. Looking at organic growth, besides the eight approved products, Incyte has seven products in the pivotal stages.

While INCY stock can see higher levels, it is helpful to see how Incyte’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

 Returns May 2024
MTD [1]
YTD [1]
Total [2]
 INCY Return 11% -8% -43%
 S&P 500 Return 4% 9% 133%
 Trefis Reinforced Value Portfolio 4% 4% 636%

[1] Returns as of 5/14/2024
[2] Cumulative total returns since the end of 2016

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