When Will Amarin Corporation plc (NASDAQ:AMRN) Become Profitable?

Amarin Corporation plc’s (NASDAQ:AMRN): Amarin Corporation plc, a pharmaceutical company, engages in the development and commercialization of therapeutics for the treatment of cardiovascular diseases in the United States. The US$6.2b market-cap posted a loss in its most recent financial year of -US$116.4m and a latest trailing-twelve-month loss of -US$84.4m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which AMRN 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 AMRN.

View our latest analysis for Amarin

AMRN is bordering on breakeven, according to the 8 Biotechs analysts. They expect the company to post a final loss in 2019, before turning a profit of US$60m in 2020. AMRN is therefore projected to breakeven around a few months from now. How fast will AMRN have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 70% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, AMRN may become profitable much later than analysts predict.

NasdaqGM:AMRN Past and Future Earnings, November 6th 2019
NasdaqGM:AMRN Past and Future Earnings, November 6th 2019

Underlying developments driving AMRN’s growth isn’t the focus of this broad overview, though, bear in mind that by and large biotechs, 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 issue worth mentioning. AMRN currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in AMRN’s case is 46%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is AMRN 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 AMRN is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Amarin’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.