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Akebia Therapeutics, Inc.'s (NASDAQ:AKBA) Path To Profitability

Simply Wall St
·3 mins read

Akebia Therapeutics, Inc.'s (NASDAQ:AKBA): Akebia Therapeutics, Inc., a biopharmaceutical company, focuses on the development and commercialization of renal therapeutics for patients with kidney diseases. With the latest financial year loss of US$279.7m and a trailing-twelve month of US$385.6m, the US$1.5b market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on AKBA’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for AKBA, its year of breakeven and its implied growth rate.

See our latest analysis for Akebia Therapeutics

According to the 8 industry analysts covering AKBA, the consensus is breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$103m in 2023. Therefore, AKBA is expected to breakeven roughly 3 years from today. How fast will AKBA have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving AKBA’s growth isn’t the focus of this broad overview, but, keep 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 AKBA has managed its capital judiciously, with debt making up 19% of equity. This means that AKBA has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of AKBA 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 AKBA, take a look at AKBA’s company page on Simply Wall St. I’ve also compiled a list of key factors you should look at:

  1. Valuation: What is AKBA 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 AKBA is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Akebia Therapeutics’s board and the CEO’s back ground.

  3. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.