Osmotica Pharmaceuticals plc (NASDAQ:OSMT): Is Breakeven Near?

By
Simply Wall St
Published
January 04, 2021

Osmotica Pharmaceuticals plc (NASDAQ:OSMT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Osmotica Pharmaceuticals plc, an integrated biopharmaceutical company, focuses on the development and commercialization of pharmaceutical products in the United States, Argentina, and Hungary. The US$258m market-cap company posted a loss in its most recent financial year of US$271m and a latest trailing-twelve-month loss of US$51m shrinking the gap between loss and breakeven. As path to profitability is the topic on Osmotica Pharmaceuticals' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Osmotica Pharmaceuticals

Osmotica Pharmaceuticals is bordering on breakeven, according to the 5 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$4.7m in 2022. Therefore, the company is expected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 59%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

NasdaqGS:OSMT Earnings Per Share Growth January 4th 2021

Underlying developments driving Osmotica Pharmaceuticals' growth isn’t the focus of this broad overview, however, bear in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Osmotica Pharmaceuticals currently has a debt-to-equity ratio of 146%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Osmotica Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Osmotica Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

  1. Valuation: What is Osmotica Pharmaceuticals 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 Osmotica Pharmaceuticals 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 Osmotica Pharmaceuticals’s 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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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