We feel now is a pretty good time to analyse Amicus Therapeutics, Inc.'s (NASDAQ:FOLD) business as it appears the company may be on the cusp of a considerable accomplishment. Amicus Therapeutics, Inc., a biotechnology company, focuses on discovering, developing, and delivering medicines for rare diseases. The US$3.5b market-cap company’s loss lessened since it announced a US$237m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$204m, as it approaches breakeven. The most pressing concern for investors is Amicus Therapeutics' 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.
Consensus from 12 of the American Biotechs analysts is that Amicus Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$43m in 2024. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% 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.
We're not going to go through company-specific developments for Amicus Therapeutics given that this is a high-level summary, however, bear in mind 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.
One thing we would like to bring into light with Amicus Therapeutics is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Amicus Therapeutics which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Amicus Therapeutics, take a look at Amicus Therapeutics' company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:
Valuation: What is Amicus Therapeutics 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 Amicus Therapeutics 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 Amicus Therapeutics’s 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.
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