Axsome Therapeutics, Inc. (NASDAQ:AXSM) Is Expected To Breakeven In The Near Future
Axsome Therapeutics, Inc. (NASDAQ:AXSM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Axsome Therapeutics, Inc., a biopharmaceutical company, engages in the development of novel therapies for central nervous system (CNS) disorders in the United States. With the latest financial year loss of US$187m and a trailing-twelve-month loss of US$159m, the US$3.4b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Axsome Therapeutics' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Axsome Therapeutics
Axsome Therapeutics is bordering on breakeven, according to the 12 American Pharmaceuticals analysts. They expect the company to post a final loss in 2024, before turning a profit of US$169m in 2025. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 61% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Axsome Therapeutics' upcoming projects, however, take into account that typically pharmaceuticals, 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 Axsome Therapeutics is its debt-to-equity ratio of 132%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Axsome Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Axsome Therapeutics' company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:
Valuation: What is Axsome 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 Axsome 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 Axsome 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.
