BioMarin Pharmaceutical Inc’s (NASDAQ:BMRN): BioMarin Pharmaceutical, Inc., a biotechnology company, develops and commercializes therapies for people with serious and life-threatening rare diseases and medical conditions. With the latest financial year loss of -US$117.0m and a trailing-twelve month of -US$125.0m, the US$17b market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on BMRN’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for BMRN, its year of breakeven and its implied growth rate.
Consensus from the 23 Biotechs analysts is BMRN is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$191m in 2020. So, BMRN is predicted to breakeven approximately 2 years from now. What rate will BMRN 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 75%, which is rather optimistic! If this rate turns out to be too aggressive, BMRN may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of BMRN’s upcoming projects, but, bear 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.
One thing I would like to bring into light with BMRN is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in BMRN’s case is 41%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on BMRN, so if you are interested in understanding the company at a deeper level, take a look at BMRN’s company page on Simply Wall St. I’ve also compiled a list of key factors you should further research:
- Valuation: What is BMRN 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 BMRN 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 BioMarin Pharmaceutical’s board and the CEO’s back ground.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.