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ACADIA Pharmaceuticals Inc.'s (NASDAQ:ACAD): ACADIA Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization of small molecule drugs that address unmet medical needs in central nervous system disorders. With the latest financial year loss of -US$245.2m and a trailing-twelve month of -US$276.2m, the US$3.7b market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on ACAD’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for ACAD, its year of breakeven and its implied growth rate.
Consensus from the 12 Biotechs analysts is ACAD is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$263m in 2021. Therefore, ACAD is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, I calculated the rate at which ACAD must grow year-on-year. It turns out an average annual growth rate of 66% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving ACAD’s growth isn’t the focus of this broad overview, however, bear in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that ACAD has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that ACAD has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of ACAD to cover in one brief article, but the key fundamentals for the company can all be found in one place – ACAD’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should look at:
- Valuation: What is ACAD 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 ACAD 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 ACADIA Pharmaceuticals’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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.