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We feel now is a pretty good time to analyse Amicus Therapeutics, Inc.'s (NASDAQ:FOLD) business as it appears the company may be on the cusp of a considerable accomplishment. Amicus Therapeutics, Inc., a biotechnology company, focuses on discovering, developing, and delivering medicines for rare diseases. With the latest financial year loss of US$250m and a trailing-twelve-month loss of US$264m, the US$3.3b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Amicus Therapeutics' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Amicus Therapeutics
Consensus from 13 of the American Biotechs analysts is that Amicus Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$90m in 2024. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 72%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Amicus Therapeutics' upcoming projects, however, take into account that by and large 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 issue worth mentioning. Amicus Therapeutics currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. 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 Amicus Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Amicus Therapeutics' company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:
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Valuation: What is Amicus Therapeutics 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 Amicus Therapeutics 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 Amicus Therapeutics’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.