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When Can We Expect A Profit From RedHill Biopharma Ltd. (NASDAQ:RDHL)?

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·3 min read
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RedHill Biopharma Ltd. (NASDAQ:RDHL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. RedHill Biopharma Ltd., a specialty biopharmaceutical company, primarily focused on gastrointestinal and infectious diseases. With the latest financial year loss of US$76m and a trailing-twelve-month loss of US$95m, the US$212m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which RedHill Biopharma 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 RedHill Biopharma

RedHill Biopharma is bordering on breakeven, according to the 7 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$11m in 2023. So, the company is predicted to breakeven approximately 2 years from now. 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 73%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for RedHill Biopharma given that this is a high-level summary, however, bear in mind that typically 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. RedHill Biopharma currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on RedHill Biopharma, so if you are interested in understanding the company at a deeper level, take a look at RedHill Biopharma's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:

  1. Valuation: What is RedHill Biopharma 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 RedHill Biopharma is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on RedHill Biopharma’s board and the CEO’s background.

  3. 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.