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Amryt Pharma plc (LON:AMYT): When Will It Breakeven?

·3 min read

Amryt Pharma plc's (LON:AMYT): Amryt Pharma plc, a biopharmaceutical company, focuses on developing and delivering various treatments to improve the lives of patients with rare or orphan diseases. The company’s loss has recently broadened since it announced a -US$65.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$89.0m, moving it further away from breakeven. Many investors are wondering the rate at which AMYT will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for AMYT’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Amryt Pharma

Consensus from the 3 Pharmaceuticals analysts is AMYT is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$11m in 2022. Therefore, AMYT is expected to breakeven roughly 2 years from today. How fast will AMYT have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, AMYT may become profitable much later than analysts predict.

AIM:AMYT Past and Future Earnings June 19th 2020
AIM:AMYT Past and Future Earnings June 19th 2020

Given this is a high-level overview, I won’t go into details of AMYT’s upcoming projects, however, keep in mind that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing I would like to bring into light with AMYT is its debt-to-equity ratio of 179%. Typically, debt shouldn’t exceed 40% of your equity, and AMYT has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is AMYT 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 AMYT 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 Amryt Pharma’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.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.