Acceleron Pharma Inc’s (NASDAQ:XLRN) Shift From Loss To Profit

Acceleron Pharma Inc’s (NASDAQ:XLRN): Acceleron Pharma Inc., a clinical stage biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutics to treat serious and rare diseases. On 31 December 2017, the US$1.65B market-cap posted a loss of -US$108.45M for its most recent financial year. Many investors are wondering the rate at which XLRN 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 XLRN.

Check out our latest analysis for Acceleron Pharma

According to the industry analysts covering XLRN, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$69.45M in 2022. Therefore, XLRN is expected to breakeven roughly 4 years from today. How fast will XLRN have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 39.62% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, XLRN may become profitable much later than analysts predict.

NasdaqGM:XLRN Past Future Earnings May 8th 18
NasdaqGM:XLRN Past Future Earnings May 8th 18

I’m not going to go through company-specific developments for XLRN given that this is a high-level summary, but, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I’d like to point out is that XLRN has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which typically has high debt relative to its equity. This means that XLRN has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on XLRN, so if you are interested in understanding the company at a deeper level, take a look at XLRN’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should look at:

  1. Historical Track Record: What has XLRN’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Acceleron Pharma’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.