ACADIA Pharmaceuticals Inc.'s (NASDAQ:ACAD) Shift From Loss To Profit
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. ACADIA Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization innovative medicines that address unmet medical needs in central nervous system (CNS) disorders and rare diseases. On 31 December 2022, the US$2.9b market-cap company posted a loss of US$216m for its most recent financial year. The most pressing concern for investors is ACADIA Pharmaceuticals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for ACADIA Pharmaceuticals
According to the 21 industry analysts covering ACADIA Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$9.4m in 2024. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 65%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for ACADIA Pharmaceuticals given that this is a high-level summary, but, bear in mind that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that ACADIA Pharmaceuticals 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 the company 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.
Next Steps:
This article is not intended to be a comprehensive analysis on ACADIA Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at ACADIA Pharmaceuticals' company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
Valuation: What is ACADIA Pharmaceuticals 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 ACADIA Pharmaceuticals 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 background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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