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

Amarin Corporation plc’s (NASDAQ:AMRN): Amarin Corporation plc, a biopharmaceutical company, focuses on the development and commercialization of therapeutics for the treatment of cardiovascular diseases in the United States. The company’s loss has recently broadened since it announced a -US$67.9m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$105.2m, moving it further away from breakeven. As path to profitability is the topic on AMRN’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for AMRN, its year of breakeven and its implied growth rate.

Check out our latest analysis for Amarin

Consensus from the 4 Biotechs analysts is AMRN is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$76m in 2020. AMRN is therefore projected to breakeven around 2 years from today. What rate will AMRN have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 76%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:AMRN Past Future Earnings December 12th 18
NasdaqGM:AMRN Past Future Earnings December 12th 18

Underlying developments driving AMRN’s growth isn’t the focus of this broad overview, though, take into account that by and large 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 I wrap up, there’s one issue worth mentioning. AMRN 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 AMRN to cover in one brief article, but the key fundamentals for the company can all be found in one place – AMRN’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should look at:

  1. Valuation: What is AMRN 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 AMRN 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 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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.