ADMA Biologics, Inc.'s (NASDAQ:ADMA): ADMA Biologics, Inc., a biopharmaceutical and specialty immunoglobulin company, develops, manufactures, and markets specialty plasma-derived biologics for the treatment of immune deficiencies and infectious diseases. The US$199m market-cap posted a loss in its most recent financial year of -US$65.7m and a latest trailing-twelve-month loss of -US$61.0m shrinking the gap between loss and breakeven. As path to profitability is the topic on ADMA’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for ADMA, its year of breakeven and its implied growth rate.
Consensus from the 7 Biotechs analysts is ADMA is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$29m in 2022. Therefore, ADMA is expected to breakeven roughly 3 years from now. In order to meet this breakeven date, I calculated the rate at which ADMA must grow year-on-year. It turns out an average annual growth rate of 68% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for ADMA given that this is a high-level summary, but, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one issue worth mentioning. ADMA currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in ADMA’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on ADMA, so if you are interested in understanding the company at a deeper level, take a look at ADMA’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further research:
- Valuation: What is ADMA 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 ADMA 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 ADMA Biologics’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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