Neos Therapeutics, Inc.'s (NASDAQ:NEOS): Neos Therapeutics, Inc., a pharmaceutical company, develops, manufactures, and commercializes products for the treatment of attention deficit hyperactivity disorder (ADHD) using its drug delivery technology platform. The US$75m market-cap posted a loss in its most recent financial year of -US$51.7m and a latest trailing-twelve-month loss of -US$22.8m shrinking the gap between loss and breakeven. The most pressing concern for investors is NEOS’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for NEOS’s growth and when analysts expect the company to become profitable.
See our latest analysis for Neos Therapeutics
Consensus from the 4 Pharmaceuticals analysts is NEOS is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$8.0m in 2021. NEOS is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, I calculated the rate at which NEOS must grow year-on-year. It turns out an average annual growth rate of 73% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, NEOS may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of NEOS’s upcoming projects, 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. 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. NEOS currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.
Next Steps:
There are too many aspects of NEOS to cover in one brief article, but the key fundamentals for the company can all be found in one place – NEOS’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further examine:
- 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.
- 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.
- 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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