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ADMA Biologics, Inc.’s (NASDAQ:ADMA): ADMA Biologics, Inc., a biopharmaceutical and specialty immunoglobulin company, develops, manufactures, and markets specialty plasma-derived biologics for the treatment of immune deficiencies and infectious diseases. The US$215m market-cap company’s loss lessens since it announced a -US$65.7m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$61.0m, as it approaches breakeven. The most pressing concern for investors is ADMA’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for ADMA.
Consensus from the 7 Biotechs analysts is ADMA is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$29m in 2022. So, ADMA is predicted to breakeven approximately 3 years from now. How fast will ADMA have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, ADMA may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for ADMA given that this is a high-level summary, however, take into account that generally 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.
One thing I would like to bring into light with ADMA is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in ADMA’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.
This article is not intended to be a comprehensive analysis on ADMA, so if you are interested in understanding the company at a deeper level, take a look at ADMA’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further research:
- Valuation: What is ADMA 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 ADMA 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 ADMA Biologics’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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.