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Aerie Pharmaceuticals, Inc.'s (NASDAQ:AERI) Path To Profitability

Simply Wall St

Aerie Pharmaceuticals, Inc.'s (NASDAQ:AERI): Aerie Pharmaceuticals, Inc., an ophthalmic pharmaceutical company, focuses on the discovery, development, and commercialization of first-in-class therapies for the treatment of glaucoma, retinal diseases, and other eye diseases. With the latest financial year loss of -US$232.6m and a trailing-twelve month of -US$239.8m, the US$987m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is AERI’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for AERI’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Aerie Pharmaceuticals

AERI is bordering on breakeven, according to the 10 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$32m in 2020. So, AERI is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which AERI must grow year-on-year. It turns out an average annual growth rate of 62% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, AERI may become profitable much later than analysts predict.

NasdaqGM:AERI Past and Future Earnings, August 8th 2019

Given this is a high-level overview, I won’t go into details of AERI’s upcoming projects, though, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing I’d like to point out is that AERI has no debt on its balance sheet, which is rare for a loss-making pharma, which usually has a high level of debt relative to its equity. AERI currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

  1. Valuation: What is AERI 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 AERI 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 Aerie Pharmaceuticals’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.