Ardelyx, Inc. (NASDAQ:ARDX): Are Analysts Optimistic?

Ardelyx, Inc. (NASDAQ:ARDX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ardelyx, Inc., a biopharmaceutical company, discovers, develops, and commercializes medicines to treat gastrointestinal and cardiorenal therapeutic areas in the United States and internationally. The company’s loss has recently broadened since it announced a US$66m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$73m, moving it further away from breakeven. The most pressing concern for investors is Ardelyx'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 Ardelyx

Ardelyx is bordering on breakeven, according to the 10 American Biotechs analysts. They expect the company to post a final loss in 2025, before turning a profit of US$113m in 2026. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 70% is expected, 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 Ardelyx's growth isn’t the focus of this broad overview, however, keep in mind 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. 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. Ardelyx currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Ardelyx's case is 79%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Ardelyx 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 Ardelyx 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 Ardelyx’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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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.