Breakeven On The Horizon For Neos Therapeutics Inc (NASDAQ:NEOS)

Neos Therapeutics Inc’s (NASDAQ:NEOS): Neos Therapeutics, Inc., a pharmaceutical company, engages in the development, manufacture, and commercialization of products for the treatment of attention deficit hyperactivity disorder (ADHD) using its drug delivery technologies. With the latest financial year loss of -US$83.33M and a trailing-twelve month of -US$70.40M, the US$247.92M market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on NEOS’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for NEOS.

See our latest analysis for Neos Therapeutics

NEOS is bordering on breakeven, according to analysts. They expect the company to post a final loss in 2019, before turning a profit of US$22.40M in 2020. NEOS is therefore projected to breakeven around 2 years from now. What rate will NEOS 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 61.72%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:NEOS Past Future Earnings Mar 9th 18
NasdaqGM:NEOS Past Future Earnings Mar 9th 18

Underlying developments driving NEOS’s growth isn’t the focus of this broad overview, however, bear in mind 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with NEOS is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and NEOS has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of NEOS 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 NEOS, take a look at NEOS’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should further examine:

  1. Valuation: What is NEOS 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 NEOS is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Neos 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.