Amarin Corporation plc's (NASDAQ:AMRN) About To Shift From Loss To Profit

We feel now is a pretty good time to analyse Amarin Corporation plc's (NASDAQ:AMRN) business as it appears the company may be on the cusp of a considerable accomplishment. Amarin Corporation plc, a pharmaceutical company, develops and commercializes therapeutics for the treatment of cardiovascular diseases in the United States. The US$2.3b market-cap company’s loss lessened since it announced a US$23m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$16m, as it approaches breakeven. The most pressing concern for investors is Amarin's 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.

View our latest analysis for Amarin

Amarin is bordering on breakeven, according to the 11 American Biotechs analysts. They expect the company to post a final loss in 2020, before turning a profit of US$29m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 57%, 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

We're not going to go through company-specific developments for Amarin given that this is a high-level summary, however, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 1.6% 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 Amarin to cover in one brief article, but the key fundamentals for the company can all be found in one place – Amarin's company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

1. Valuation: What is Amarin 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 Amarin 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 Amarin’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.

This article by Simply Wall St is general in nature. 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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