When Will AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) Turn A Profit?

By
Simply Wall St
Published
February 03, 2021
NasdaqGM:ACRX

We feel now is a pretty good time to analyse AcelRx Pharmaceuticals, Inc.'s (NASDAQ:ACRX) business as it appears the company may be on the cusp of a considerable accomplishment. AcelRx Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on the development and commercialization of therapies for the treatment of acute pain. The US$246m market-cap company posted a loss in its most recent financial year of US$53m and a latest trailing-twelve-month loss of US$46m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which AcelRx Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” 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 AcelRx Pharmaceuticals

Consensus from 4 of the American Pharmaceuticals analysts is that AcelRx Pharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$11m in 2022. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 61%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGM:ACRX Earnings Per Share Growth February 3rd 2021

Given this is a high-level overview, we won’t go into details of AcelRx Pharmaceuticals' upcoming projects, though, bear in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, 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. AcelRx Pharmaceuticals currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

This article is not intended to be a comprehensive analysis on AcelRx Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at AcelRx Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

  1. Historical Track Record: What has AcelRx Pharmaceuticals' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on AcelRx Pharmaceuticals' 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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