We feel now is a pretty good time to analyse Osmotica Pharmaceuticals plc's (NASDAQ:OSMT) business as it appears the company may be on the cusp of a considerable accomplishment. Osmotica Pharmaceuticals plc, an integrated biopharmaceutical company, focuses on the development and commercialization of pharmaceutical products in the United States, Argentina, and Hungary. With the latest financial year loss of US$270.9m and a trailing-twelve-month loss of US$155.4m, the US$399m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Osmotica Pharmaceuticals' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 5 of the American Pharmaceuticals analysts is that Osmotica Pharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$13m in 2022. Therefore, the company is expected to breakeven roughly 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 59% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Osmotica Pharmaceuticals' growth isn’t the focus of this broad overview, however, keep in mind that by and large 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 Osmotica Pharmaceuticals is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of Osmotica Pharmaceuticals 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 Osmotica Pharmaceuticals, take a look at Osmotica Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:
Valuation: What is Osmotica Pharmaceuticals 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 Osmotica Pharmaceuticals 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 Osmotica Pharmaceuticals’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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