Yahoo Finance Market Sentiment Around Loss-Making Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM)
Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rhythm Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company, focuses on the rare neuroendocrine diseases. The US$2.5b market-cap company announced a latest loss of US$185m on 31 December 2023 for its most recent financial year result. Many investors are wondering about the rate at which Rhythm Pharmaceuticals will turn a profit, with the big question being “when will the company 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 Rhythm Pharmaceuticals
According to the 9 industry analysts covering Rhythm Pharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$30m in 2026. So, the company is predicted to breakeven approximately 2 years from now. 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 61%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Rhythm Pharmaceuticals' growth isn’t the focus of this broad overview, though, keep in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company 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 we would like to bring into light with Rhythm Pharmaceuticals is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Rhythm Pharmaceuticals' case is 63%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Rhythm Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Rhythm Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:
Valuation: What is Rhythm Pharmaceuticals 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 Rhythm Pharmaceuticals is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rhythm Pharmaceuticals’s board and the CEO’s background.
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.
