Gemphire Therapeutics Inc (NASDAQ:GEMP): Are Analysts Optimistic?
Gemphire Therapeutics Inc’s (NASDAQ:GEMP): Gemphire Therapeutics Inc., a clinical-stage biopharmaceutical company, focuses on developing and commercializing therapies for the treatment of dyslipidemia cardiovascular disease and nonalcoholic fatty liver disease/non-alcoholic steatohepatitis (NASH). With the latest financial year loss of -US$14.95M and a trailing-twelve month of -US$33.88M, the US$103.18M market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is GEMP’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for GEMP’s growth and when analysts expect the company to become profitable.
See our latest analysis for Gemphire Therapeutics
According to the industry analysts covering GEMP, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$89.32M in 2022. So, GEMP is predicted to breakeven approximately 4 years from now. What rate will GEMP have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 24.02%, which is rather optimistic! If this rate turns out to be too aggressive, GEMP may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for GEMP given that this is a high-level summary, though, keep in mind that by and large biotechs, 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 GEMP is its debt-to-equity ratio of 100.15%. Typically, debt shouldn’t exceed 40% of your equity, and GEMP has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on GEMP, so if you are interested in understanding the company at a deeper level, take a look at GEMP’s company page on Simply Wall St. I’ve also put together a list of important aspects you should look at:
Historical Track Record: What has GEMP’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Gemphire Therapeutics’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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
