ADMA Biologics, Inc.'s (NASDAQ:ADMA): ADMA Biologics, Inc., a biopharmaceutical and specialty immunoglobulin company, develops, manufactures, and markets specialty plasma-derived biologics for the treatment of immune deficiencies and infectious diseases. With the latest financial year loss of -US$65.7m and a trailing-twelve month of -US$55.8m, the US$235m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on ADMA’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for ADMA.
Consensus from the 6 Biotechs analysts is ADMA is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$26m in 2022. Therefore, ADMA is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, I calculated the rate at which ADMA must grow year-on-year. It turns out an average annual growth rate of 61% is expected, which is rather optimistic! If this rate turns out to be too aggressive, ADMA may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for ADMA given that this is a high-level summary, but, bear 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 issue worth mentioning. ADMA currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and ADMA has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of ADMA which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ADMA, take a look at ADMA’s company page on Simply Wall St. I’ve also put together a list of important factors you should further examine:
- Historical Track Record: What has ADMA's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ADMA Biologics’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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