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Amarin Corporation plc's (NASDAQ:AMRN) Shift From Loss To Profit

Simply Wall St

Amarin Corporation plc's (NASDAQ:AMRN): Amarin Corporation plc, a pharmaceutical company, engages in the development and commercialization of therapeutics for the treatment of cardiovascular diseases in the United States. With the latest financial year loss of -US$116.4m and a trailing-twelve month of -US$63.4m, the US$7.6b market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which AMRN 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 AMRN.

See our latest analysis for Amarin

Consensus from the 9 Biotechs analysts is AMRN is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$11m in 2020. AMRN is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which AMRN must grow year-on-year. It turns out an average annual growth rate of 76% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, AMRN may become profitable much later than analysts predict.

NasdaqGM:AMRN Past and Future Earnings, December 2nd 2019

Given this is a high-level overview, I won’t go into details of AMRN’s upcoming projects, but, bear in mind that by and large 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.

One thing I’d like to point out is that AMRN has managed its capital prudently, with debt making up 10% of equity. This means that AMRN 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 too many aspects of AMRN to cover in one brief article, but the key fundamentals for the company can all be found in one place – AMRN’s company page on Simply Wall St. I’ve also compiled a list of important factors you should look at:

  1. Valuation: What is AMRN 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 AMRN 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 Amarin’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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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