AcelRx Pharmaceuticals, Inc.'s (NASDAQ:ACRX): AcelRx Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on the development and commercialization of therapies for the treatment of acute pain. With the latest financial year loss of -US$47.1m and a trailing-twelve month of -US$51.4m, the US$154m market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which ACRX will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for ACRX.
ACRX is bordering on breakeven, according to the 6 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$73m in 2022. Therefore, ACRX is expected to breakeven roughly 3 years from today. In order to meet this breakeven date, I calculated the rate at which ACRX must grow year-on-year. It turns out an average annual growth rate of 71% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, ACRX may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of ACRX’s upcoming projects, however, take into account that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. ACRX currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.
This article is not intended to be a comprehensive analysis on ACRX, so if you are interested in understanding the company at a deeper level, take a look at ACRX’s company page on Simply Wall St. I’ve also put together a list of important factors you should further examine:
- Valuation: What is ACRX 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 ACRX 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 AcelRx 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.
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