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Endo International plc’s (NASDAQ:ENDP): Endo International plc manufactures and sells generic and branded pharmaceuticals in the United States, Canada, and internationally. The US$1.1b market-cap posted a loss in its most recent financial year of -US$961.8m and a latest trailing-twelve-month loss of -US$476.6m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which ENDP 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 ENDP, its year of breakeven and its implied growth rate.
See our latest analysis for Endo International
ENDP is bordering on breakeven, according to the 14 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$4.6m in 2020. So, ENDP is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which ENDP must grow year-on-year. It turns out an average annual growth rate of 37% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, ENDP may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for ENDP given that this is a high-level summary, but, keep in mind 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, a high growth rate 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. ENDP currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.
Next Steps:
There are too many aspects of ENDP to cover in one brief article, but the key fundamentals for the company can all be found in one place – ENDP’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should further research:
- Valuation: What is ENDP 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 ENDP 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 Endo International’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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.