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Market Sentiment Around Loss-Making Aerie Pharmaceuticals, Inc. (NASDAQ:AERI)

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·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Aerie Pharmaceuticals, Inc.'s (NASDAQ:AERI) future prospects. Aerie Pharmaceuticals, Inc., an ophthalmic pharmaceutical company, focuses on the discovery, development, and commercialization of first-in-class therapies for the treatment of glaucoma, ocular surface, and retinal diseases in the United States. With the latest financial year loss of US$183m and a trailing-twelve-month loss of US$166m, the US$340m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Aerie Pharmaceuticals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Aerie Pharmaceuticals

Aerie Pharmaceuticals is bordering on breakeven, according to the 9 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$35m in 2024. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 61% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

Given this is a high-level overview, we won’t go into details of Aerie Pharmaceuticals' upcoming projects, though, take into account 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Aerie Pharmaceuticals is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are too many aspects of Aerie Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Aerie Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

  1. Historical Track Record: What has Aerie Pharmaceuticals' 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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Aerie Pharmaceuticals' 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.

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

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.