Stock Analysis

When Will Idera Pharmaceuticals, Inc. (NASDAQ:IDRA) Become Profitable?

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NasdaqCM:ACGN
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With the business potentially at an important milestone, we thought we'd take a closer look at Idera Pharmaceuticals, Inc.'s (NASDAQ:IDRA) future prospects. Idera Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of drugs for oncology and rare disease indications in the United States. With the latest financial year loss of US$85m and a trailing-twelve-month loss of US$87m, the US$197m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Idera Pharmaceuticals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Idera Pharmaceuticals

Consensus from 5 of the American Biotechs analysts is that Idera Pharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$9.4m in 2023. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 58% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqCM:IDRA Earnings Per Share Growth January 31st 2021

Underlying developments driving Idera Pharmaceuticals' growth isn’t the focus of this broad overview, but, bear in mind that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Idera Pharmaceuticals 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.

Next Steps:

There are key fundamentals of Idera Pharmaceuticals which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Idera Pharmaceuticals, take a look at Idera Pharmaceuticals' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

  1. Historical Track Record: What has Idera Pharmaceuticals' 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 Idera Pharmaceuticals' 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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