Amarin Corporation plc's (NASDAQ:AMRN) Path To Profitability

By
Simply Wall St
Published
January 17, 2022
NasdaqGM:AMRN
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We feel now is a pretty good time to analyse Amarin Corporation plc's (NASDAQ:AMRN) business as it appears the company may be on the cusp of a considerable accomplishment. Amarin Corporation plc, a pharmaceutical company, engages in the development and commercialization of therapeutics for the treatment of cardiovascular diseases in the United States. The US$1.4b market-cap company posted a loss in its most recent financial year of US$18m and a latest trailing-twelve-month loss of US$2.0m shrinking the gap between loss and breakeven. The most pressing concern for investors is Amarin's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Amarin

Amarin is bordering on breakeven, according to the 9 American Biotechs analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$55m in 2023. The company is therefore projected 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 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, 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:AMRN Earnings Per Share Growth January 17th 2022

Given this is a high-level overview, we won’t go into details of Amarin's upcoming projects, 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.

Before we wrap up, there’s one aspect worth mentioning. Amarin currently has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

  1. Valuation: What is Amarin 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 Amarin 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 Amarin’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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