Loss-Making Aker BioMarine AS (OB:AKBM) Set To Breakeven

With the business potentially at an important milestone, we thought we'd take a closer look at Aker BioMarine AS' (OB:AKBM) future prospects. Aker BioMarine AS, a biotechnology company, develops krill-derived ingredients and products for nutraceutical, aquaculture, and animal feed applications. The kr9.9b market-cap company posted a loss in its most recent financial year of US$24m and a latest trailing-twelve-month loss of US$26m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Aker BioMarine's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Aker BioMarine

Consensus from 2 of the Norwegian Food analysts is that Aker BioMarine is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$30m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 114%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Aker BioMarine's growth isn’t the focus of this broad overview, but, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Aker BioMarine currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Aker BioMarine's case is 60%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Aker BioMarine, so if you are interested in understanding the company at a deeper level, take a look at Aker BioMarine's company page on Simply Wall St. We've also compiled a list of important factors you should look at:

1. Valuation: What is Aker BioMarine 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 Aker BioMarine 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 Aker BioMarine’s 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.

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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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