Amarin Corporation plc's (NASDAQ:AMRN): Amarin Corporation plc, a pharmaceutical company, develops and commercializes therapeutics for the treatment of cardiovascular diseases in the United States. With the latest financial year loss of -US$22.6m and a trailing-twelve month of -US$18.8m, the US$2.7b market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is AMRN’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for AMRN’s growth and when analysts expect the company to become profitable.
According to the 10 industry analysts covering AMRN, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$121m in 2021. So, AMRN is predicted to breakeven approximately a couple of months from now! What rate will AMRN have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 59%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for AMRN given that this is a high-level summary, but, keep in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one aspect worth mentioning. AMRN has managed its capital judiciously, with debt making up 6.3% of equity. This means that AMRN has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of AMRN to cover in one brief article, but the key fundamentals for the company can all be found in one place – AMRN’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:
Valuation: What is AMRN worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether AMRN is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Amarin’s board and the CEO’s back ground.
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.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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