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Ardelyx, Inc. (NASDAQ:ARDX): Is Breakeven Near?

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We feel now is a pretty good time to analyse Ardelyx, Inc.'s (NASDAQ:ARDX) business as it appears the company may be on the cusp of a considerable accomplishment. Ardelyx, Inc., a biopharmaceutical company, discovers, develops, and commercializes medicines to treat gastrointestinal and cardiorenal therapeutic areas in the United States and internationally. The company’s loss has recently broadened since it announced a US$66m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$73m, moving it further away from breakeven. Many investors are wondering about the rate at which Ardelyx 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 Ardelyx

Consensus from 10 of the American Biotechs analysts is that Ardelyx is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$113m in 2026. The company is therefore projected to breakeven around 2 years from today. 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 70% 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-growth
NasdaqGM:ARDX Earnings Per Share Growth December 16th 2024

Underlying developments driving Ardelyx's growth isn’t the focus of this broad overview, though, keep in mind that by and large 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.

Before we wrap up, there’s one issue worth mentioning. Ardelyx currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Ardelyx's case is 79%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Ardelyx, so if you are interested in understanding the company at a deeper level, take a look at Ardelyx's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

  1. Valuation: What is Ardelyx 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 Ardelyx 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 Ardelyx’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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