TherapeuticsMD Inc’s (NASDAQ:TXMD): TherapeuticsMD, Inc. operates as a women’s health care product company. With the latest financial year loss of -US$77m and a trailing-twelve month of -US$94m, the US$1.1b market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which TXMD will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for TXMD.
TXMD is bordering on breakeven, according to Pharmaceuticals analysts. They expect the company to post a final loss in 2019, before turning a profit of US$40m in 2020. Therefore, TXMD is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which TXMD must grow year-on-year. It turns out an average annual growth rate of 76% is expected, which is rather optimistic! If this rate turns out to be too aggressive, TXMD may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of TXMD’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.
One thing I would like to bring into light with TXMD is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in TXMD’s case is 94%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on TXMD, so if you are interested in understanding the company at a deeper level, take a look at TXMD’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:
- Valuation: What is TXMD 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 TXMD 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 TherapeuticsMD’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.