Alkermes plc’s (NASDAQ:ALKS): Alkermes plc, a biopharmaceutical company, researches, develops, and commercializes pharmaceutical products to address unmet medical needs of patients in various therapeutic areas in the United States, Ireland, and internationally. The US$7.07B market-cap company’s loss lessens since it announced a -US$157.94M bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$151.57M, as it approaches breakeven. Many investors are wondering the rate at which ALKS will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for ALKS’s growth and when analysts expect the company to become profitable.
Expectation from analysts is ALKS is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$241.81M in 2021. ALKS is therefore projected to breakeven around 3 years from now. What rate will ALKS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 72.62%, which is extremely buoyant. If this rate turns out to be too aggressive, ALKS may become profitable much later than analysts predict.
Underlying developments driving ALKS’s growth isn’t the focus of this broad overview, however, take into account that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. ALKS has managed its capital judiciously, with debt making up 24.30% of equity. This means that ALKS has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of ALKS to cover in one brief article, but the key fundamentals for the company can all be found in one place – ALKS’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should look at:
- Valuation: What is ALKS 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 ALKS 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 Alkermes’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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.