We feel now is a pretty good time to analyse Apellis Pharmaceuticals, Inc.'s (NASDAQ:APLS) business as it appears the company may be on the cusp of a considerable accomplishment. Apellis Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutic compounds through the inhibition of the complement system for autoimmune and inflammatory diseases. The US$5.6b market-cap company announced a latest loss of US$746m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is Apellis Pharmaceuticals' 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.
Consensus from 15 of the American Biotechs analysts is that Apellis Pharmaceuticals is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$8.5m in 2024. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% 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.
Underlying developments driving Apellis Pharmaceuticals' growth isn’t the focus of this broad overview, but, take into account that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one issue worth mentioning. Apellis Pharmaceuticals currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Apellis Pharmaceuticals' case is 95%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Apellis Pharmaceuticals which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Apellis Pharmaceuticals, take a look at Apellis Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:
- Valuation: What is Apellis Pharmaceuticals 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 Apellis Pharmaceuticals 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 Apellis Pharmaceuticals’s board and the CEO’s background.
- 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.
What are the risks and opportunities for Apellis Pharmaceuticals?
Trading at 85.6% below our estimate of its fair value
Earnings are forecast to grow 68.24% per year
Highly volatile share price over the past 3 months
Shareholders have been diluted in the past year
Significant insider selling over the past 3 months
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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.
Apellis Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutic compounds through the inhibition of the complement system for autoimmune and inflammatory diseases.
High growth potential with adequate balance sheet.