Osmotica Pharmaceuticals plc's (NASDAQ:OSMT): Osmotica Pharmaceuticals plc, an integrated biopharmaceutical company, develops, manufactures, and commercializes specialty products that target markets with underserved patient populations. With the latest financial year loss of -US$109.4m and a trailing-twelve month of -US$111.0m, the US$137m market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which OSMT will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for OSMT, its year of breakeven and its implied growth rate.
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OSMT is bordering on breakeven, according to the 3 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$42m in 2022. OSMT is therefore projected to breakeven around 3 years from today. How fast will OSMT 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 74% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, OSMT may become profitable much later than analysts predict.
Underlying developments driving OSMT’s growth isn’t the focus of this broad overview, but, keep in mind that by and large 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 I would like to bring into light with OSMT is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in OSMT’s case is 72%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of OSMT 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 OSMT, take a look at OSMT’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:
- Valuation: What is OSMT 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 OSMT 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 Osmotica Pharmaceuticals’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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