Avadel Pharmaceuticals plc (NASDAQ:AVDL) Is Expected To Breakeven In The Near Future

We feel now is a pretty good time to analyse Avadel Pharmaceuticals plc's (NASDAQ:AVDL) business as it appears the company may be on the cusp of a considerable accomplishment. Avadel Pharmaceuticals plc operates as a biopharmaceutical company in the United States. The US$1.6b market-cap company’s loss lessened since it announced a US$160m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$157m, as it approaches breakeven. As path to profitability is the topic on Avadel Pharmaceuticals' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Avadel Pharmaceuticals

According to the 9 industry analysts covering Avadel Pharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$59m in 2025. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Avadel Pharmaceuticals' growth isn’t the focus of this broad overview, though, take into account that by and large pharmaceuticals, 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. Avadel Pharmaceuticals currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Avadel Pharmaceuticals' case is 44%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Avadel Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Avadel Pharmaceuticals' company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:

1. Valuation: What is Avadel 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 Avadel Pharmaceuticals 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 Avadel Pharmaceuticals’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com