Endo International plc’s (NASDAQ:ENDP): Endo International plc, a specialty pharmaceutical company, manufactures and sells generic and branded pharmaceuticals in the United States, Canada, and internationally. The US$2.5b market-cap company announced a latest loss of -US$961.8m on 31 December 2018 for its most recent financial year result. Many investors are wondering the rate at which ENDP will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for ENDP’s growth and when analysts expect the company to become profitable.
Consensus from the 14 Pharmaceuticals analysts is ENDP is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$110m in 2020. So, ENDP is predicted to breakeven approximately a couple of months from now! What rate will ENDP 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 80%, which signals high confidence from analysts. If this rate turns out to be too aggressive, ENDP may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of ENDP’s upcoming projects, though, take into account that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
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. These losses tend to occur only on paper, however, in other cases it can be forewarning.
There are key fundamentals of ENDP which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ENDP, take a look at ENDP’s company page on Simply Wall St. I’ve also compiled a list of key factors you should look at:
- 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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