Akebia Therapeutics, Inc.'s (NASDAQ:AKBA) Profit Outlook

Akebia Therapeutics, Inc. (NASDAQ:AKBA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Akebia Therapeutics, Inc., a biopharmaceutical company, focuses on the development and commercialization of therapeutics for patients with kidney diseases. The US$750m market-cap company’s loss lessened since it announced a US$69m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$36m, as it approaches breakeven. The most pressing concern for investors is Akebia Therapeutics' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Consensus from 5 of the American Biotechs analysts is that Akebia Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$26m in 2026. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Akebia Therapeutics' upcoming projects, though, 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

Check out our latest analysis for Akebia Therapeutics

Before we wrap up, there’s one issue worth mentioning. Akebia Therapeutics currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Akebia Therapeutics 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 Akebia Therapeutics 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 Akebia Therapeutics’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.