Breakeven On The Horizon For Axsome Therapeutics, Inc. (NASDAQ:AXSM)
With the business potentially at an important milestone, we thought we'd take a closer look at Axsome Therapeutics, Inc.'s (NASDAQ:AXSM) future prospects. Axsome Therapeutics, Inc., a biopharmaceutical company, engages in the development of novel therapies for central nervous system (CNS) disorders in the United States. The company’s loss has recently broadened since it announced a US$187m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$202m, moving it further away from breakeven. Many investors are wondering about the rate at which Axsome Therapeutics will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Axsome Therapeutics
Consensus from 15 of the American Pharmaceuticals analysts is that Axsome Therapeutics is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$69m in 2025. So, the company is predicted to breakeven just over a year 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 58% is expected, which signals high confidence from analysts. 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, though, bear in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Axsome Therapeutics currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Axsome Therapeutics' case is 66%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Axsome 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 Axsome Therapeutics, take a look at Axsome Therapeutics' company page on Simply Wall St. We've also put together a list of essential 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.
