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Alkermes Plc's (NASDAQ:ALKS) Shift From Loss To Profit

Simply Wall St ·  {{timeTz}}

We feel now is a pretty good time to analyse Alkermes plc's (NASDAQ:ALKS) business as it appears the company may be on the cusp of a considerable accomplishment. Alkermes plc, a biopharmaceutical company, researches, develops, and commercializes pharmaceutical products to address unmet medical needs of patients in various therapeutic areas in the United States, Ireland, and internationally. With the latest financial year loss of US$48m and a trailing-twelve-month loss of US$94m, the US$4.0b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Alkermes' investors mind, we've decided to gauge market sentiment . We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Alkermes

Consensus from 10 of the American Biotechs analysts is that Alkermes is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$57m in 2024. The company is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 77% is expected, 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-growthNasdaqGS:ALKS Earnings Per Share Growth August 28th 2022

Underlying developments driving Alkermes' growth isn't the focus of this broad overview, though, keep in mind that typically biotechs, 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 27% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Alkermes 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 Alkermes 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 Alkermes'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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