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Alkermes plc (NASDAQ:ALKS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Alkermes plc, a biopharmaceutical company, researches, develops, and commercializes pharmaceutical products to address unmet medical needs of patients in various therapeutic areas in the United States, Ireland, and internationally. The US$5.0b market-cap company posted a loss in its most recent financial year of US$48m and a latest trailing-twelve-month loss of US$62m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Alkermes will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Alkermes is bordering on breakeven, according to the 9 American Biotechs analysts. They expect the company to post a final loss in 2023, before turning a profit of US$82m in 2024. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 77%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Alkermes' upcoming projects, but, 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 27% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of Alkermes 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 Alkermes, take a look at Alkermes' company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:
Valuation: What is Alkermes 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 Alkermes 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 Alkermes’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.