Pharming Group NV.’s (AMS:PHARM) Shift From Loss To Profit
Pharming Group NV.’s (ENXTAM:PHARM): Pharming Group N.V., a specialty pharmaceutical company, develops and produces human therapeutic proteins for the treatment of rare diseases and unmet medical needs. The €819.51M market-cap company announced a latest loss of -€79.96M on 31 December 2017 for its most recent financial year result. Many investors are wondering the rate at which PHARM will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for PHARM.
See our latest analysis for Pharming Group
According to the industry analysts covering PHARM, breakeven is near. They expect the company to post a final loss in 2017, before turning a profit of €28.77M in 2018. So, PHARM is predicted to breakeven approximately a couple of months from now! How fast will PHARM have to grow each year in order to reach the breakeven point by 2018? Working backwards from analyst estimates, it turns out that they expect the company to grow 50.75% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, PHARM may become profitable much later than analysts predict.
Underlying developments driving PHARM’s growth isn’t the focus of this broad overview, however, take into account that generally 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.
Before I wrap up, there’s one issue worth mentioning. PHARM currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in PHARM’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of PHARM to cover in one brief article, but the key fundamentals for the company can all be found in one place – PHARM’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further examine:
Valuation: What is PHARM 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 PHARM 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 Pharming Group’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.
