Akebia Therapeutics, Inc.'s (NASDAQ:AKBA): Akebia Therapeutics, Inc., a biopharmaceutical company, focuses on the development and commercialization of therapeutics for patients with kidney diseases. The US$752m market-cap posted a loss in its most recent financial year of -US$143.6m and a latest trailing-twelve-month loss of -US$245.2m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on AKBA’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for AKBA’s growth and when analysts expect the company to become profitable.
According to the 8 industry analysts covering AKBA, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$51m in 2022. So, AKBA is predicted to breakeven approximately 2 years from now. What rate will AKBA 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 57%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving AKBA’s growth isn’t the focus of this broad overview, however, take into account that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company 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’d like to point out is that AKBA has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which usually has a high level of debt relative to its equity. This means that AKBA has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of AKBA to cover in one brief article, but the key fundamentals for the company can all be found in one place – AKBA’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:
- Historical Track Record: What has AKBA's 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 Akebia Therapeutics’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.
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