Alimera Sciences, Inc. (NASDAQ:ALIM) Has Found A Path To Profitability
With the business potentially at an important milestone, we thought we'd take a closer look at Alimera Sciences, Inc.'s (NASDAQ:ALIM) future prospects. Alimera Sciences, Inc., a pharmaceutical company, engages in the development and commercialization of ophthalmic pharmaceuticals. The US$195m market-cap company posted a loss in its most recent financial year of US$18m and a latest trailing-twelve-month loss of US$21m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Alimera Sciences' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Alimera Sciences
Alimera Sciences is bordering on breakeven, according to the 3 American Pharmaceuticals analysts. They expect the company to post a final loss in 2023, before turning a profit of US$3.8m in 2024. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 123%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Alimera Sciences' upcoming projects, but, 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one issue worth mentioning. Alimera Sciences currently has a debt-to-equity ratio of 131%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Alimera Sciences, so if you are interested in understanding the company at a deeper level, take a look at Alimera Sciences' company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:
Historical Track Record: What has Alimera Sciences' 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 Alimera Sciences' 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.
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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.
