ALK-Abelló A/S's (CPH:ALK B) Path To Profitability

February 13, 2020

ALK-Abelló A/S's (CPH:ALK B): ALK-Abelló A/S, a pharmaceutical company, develops and markets products and services for allergy and allergic asthma in Europe, North America, and internationally. The ø21b market-cap company announced a latest loss of -ø50.0m on 31 December 2019 for its most recent financial year result. The most pressing concern for investors is ALK B’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for ALK B.

See our latest analysis for ALK-Abelló

According to the 4 industry analysts covering ALK B, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of ø206m in 2021. ALK B is therefore projected to breakeven around a few months from now. How fast will ALK B have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 52% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, ALK B may become profitable much later than analysts predict.

CPSE:ALK B Past and Future Earnings, February 14th 2020

Given this is a high-level overview, I won’t go into details of ALK B’s upcoming projects, however, take into account that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. ALK B has managed its capital judiciously, with debt making up 23% of equity. This means that ALK B has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

Valuation: What is ALK B 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 ALK B 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 ALK-Abelló’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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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