Osmotica Pharmaceuticals plc's (NASDAQ:OSMT) Profit Outlook

By
Simply Wall St
Published
July 25, 2021
NasdaqGS:OSMT
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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 company’s loss has recently broadened since it announced a US$80m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$86m, moving it further away from breakeven. Many investors are wondering about the rate at which Osmotica Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Osmotica Pharmaceuticals

Osmotica Pharmaceuticals is bordering on breakeven, according to the 2 American Pharmaceuticals analysts. They expect the company to post a final loss in 2022, before turning a profit of US$8.9m in 2023. So, the company is predicted to breakeven approximately 2 years from now. 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 65% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGS:OSMT Earnings Per Share Growth July 25th 2021

Given this is a high-level overview, we won’t go into details of Osmotica Pharmaceuticals' upcoming projects, but, bear in mind that generally 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.

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

Next Steps:

This article is not intended to be a comprehensive analysis on Osmotica Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Osmotica Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

  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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