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With the business potentially at an important milestone, we thought we'd take a closer look at Liquidia Technologies, Inc.'s (NASDAQ:LQDA) future prospects. Liquidia Technologies, Inc., a late-stage clinical biopharmaceutical company, focuses on the development and commercialization of novel products which utilize PRINT technology to transform the lives of patients. The company’s loss has recently broadened since it announced a US$47.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$56.6m, moving it further away from breakeven. Many investors are wondering about the rate at which Liquidia Technologies 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.
Liquidia Technologies is bordering on breakeven, according to the 3 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$35m in 2023. The company is therefore projected to breakeven around 3 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 68%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Liquidia Technologies' growth isn’t the focus of this broad overview, however, keep in mind that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business 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 would like to bring into light with Liquidia Technologies is its debt-to-equity ratio of 148%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Liquidia Technologies, so if you are interested in understanding the company at a deeper level, take a look at Liquidia Technologies' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:
Valuation: What is Liquidia Technologies 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 Liquidia Technologies 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 Liquidia Technologies’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.
This article by Simply Wall St is general in nature. 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.
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