When Can We Expect A Profit From Amarin Corporation plc (NASDAQ:AMRN)?

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. With the latest financial year loss of -US$116.4m and a trailing-twelve month of -US$116.8m, the US$6.4b market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on AMRN’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for AMRN.

View our latest analysis for Amarin

Consensus from the 5 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$130m in 2020. So, AMRN is predicted to breakeven approximately a couple of months from now! 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 67%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:AMRN Past and Future Earnings, July 23rd 2019
NasdaqGM:AMRN Past and Future Earnings, July 23rd 2019

Given this is a high-level overview, I won’t go into details of AMRN’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. 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. AMRN currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in AMRN’s case is 53%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

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 put together a list of key aspects you should further research:

  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.