Adamas Pharmaceuticals, Inc. (NASDAQ:ADMS): Is Breakeven Near?

By
Simply Wall St
Published
December 12, 2020

With the business potentially at an important milestone, we thought we'd take a closer look at Adamas Pharmaceuticals, Inc.'s (NASDAQ:ADMS) future prospects. Adamas Pharmaceuticals, Inc. focuses on the discovery, development, and commercialization of medicines for patients suffering from chronic neurologic disorders in the United States. The US$141m market-cap company posted a loss in its most recent financial year of US$105m and a latest trailing-twelve-month loss of US$62m shrinking the gap between loss and breakeven. The most pressing concern for investors is Adamas Pharmaceuticals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Adamas Pharmaceuticals

Adamas Pharmaceuticals is bordering on breakeven, according to the 10 American Biotechs analysts. They expect the company to post a final loss in 2022, before turning a profit of US$7.3m in 2023. Therefore, the company is expected to breakeven roughly 3 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 61% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:ADMS Earnings Per Share Growth December 12th 2020

We're not going to go through company-specific developments for Adamas Pharmaceuticals given that this is a high-level summary, however, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Adamas Pharmaceuticals is it 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. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are too many aspects of Adamas Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Adamas Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:

  1. Valuation: What is Adamas Pharmaceuticals 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 Adamas Pharmaceuticals 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 Adamas Pharmaceuticals’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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