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ADMA Biologics, Inc. (NASDAQ:ADMA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. ADMA Biologics, Inc., a biopharmaceutical company, engages in developing, manufacturing, and marketing specialty plasma-derived biologics for the treatment of immune deficiencies and infectious diseases in the United States and internationally. The US$394m market-cap company announced a latest loss of US$72m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is ADMA Biologics' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for ADMA Biologics
According to the 3 industry analysts covering ADMA Biologics, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$23m in 2024. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for ADMA Biologics given that this is a high-level summary, but, keep in mind that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company 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 ADMA Biologics is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in ADMA Biologics' case is 67%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on ADMA Biologics, so if you are interested in understanding the company at a deeper level, take a look at ADMA Biologics' company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
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Valuation: What is ADMA Biologics 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 ADMA Biologics is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ADMA Biologics’s board and the CEO’s background.
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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. 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.