Axsome Therapeutics Inc’s (NASDAQ:AXSM) Profit Outlook

Axsome Therapeutics Inc’s (NASDAQ:AXSM): Axsome Therapeutics, Inc., a clinical-stage biopharmaceutical company, develops therapies for the management of central nervous system (CNS) disorders. With the latest financial year loss of -US$27.20M and a trailing-twelve month of -US$28.84M, the US$68.71M market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which AXSM will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for AXSM, its year of breakeven and its implied growth rate.

See our latest analysis for Axsome Therapeutics

Expectation from analysts is AXSM is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$5.76M in 2021. So, AXSM is predicted to breakeven approximately 3 years from now. How fast will AXSM 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 2.90% year-on-year, on average, which is relatively conservative. If this rate turns out to be too low, AXSM may become profitable faster than analysts expect.

NasdaqGM:AXSM Past Future Earnings Mar 7th 18
NasdaqGM:AXSM Past Future Earnings Mar 7th 18

Underlying developments driving AXSM’s growth isn’t the focus of this broad overview, but, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. AXSM currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in AXSM’s case is 59.94%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of AXSM to cover in one brief article, but the key fundamentals for the company can all be found in one place – AXSM’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further examine:

  1. Historical Track Record: What has AXSM’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Axsome Therapeutics’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.