When Can We Expect A Profit From Adamas Pharmaceuticals Inc (NASDAQ:ADMS)?

Adamas Pharmaceuticals Inc’s (NASDAQ:ADMS): Adamas Pharmaceuticals, Inc. discovers, develops, and sells therapies for chronic neurologic disorders. With the latest financial year loss of -US$89.49m and a trailing-twelve month of -US$108.43m, the US$704.78m market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which ADMS will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for ADMS, its year of breakeven and its implied growth rate.

See our latest analysis for Adamas Pharmaceuticals

Expectation from Biotechs analysts is ADMS is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$37.72m in 2021. Therefore, ADMS is expected to breakeven roughly a few months from now. How fast will ADMS have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 63.80% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, ADMS may become profitable much later than analysts predict.

NasdaqGM:ADMS Past Future Earnings June 18th 18
NasdaqGM:ADMS Past Future Earnings June 18th 18

I’m not going to go through company-specific developments for ADMS given that this is a high-level summary, however, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before I wrap up, there’s one issue worth mentioning. ADMS currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in ADMS’s case is 63.15%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of ADMS which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ADMS, take a look at ADMS’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further examine:

  1. Valuation: What is ADMS 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 ADMS 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 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.