Amarin Corporation plc’s (NASDAQ:AMRN): 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$6.3b market-cap company’s loss lessens since it announced a -US$116.4m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$63.4m, as it approaches breakeven. The most pressing concern for investors is AMRN’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for AMRN.
According to the 10 industry analysts covering AMRN, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$240m in 2021. Therefore, AMRN is expected to breakeven roughly a couple of months from now! How fast will AMRN 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 58% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving AMRN’s growth isn’t the focus of this broad overview, however, keep in mind that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that AMRN has managed its capital prudently, with debt making up 10% of equity. This means that AMRN has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on AMRN, so if you are interested in understanding the company at a deeper level, take a look at AMRN’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- 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.
- 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.
- 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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