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Breakeven On The Horizon For KemPharm, Inc. (NASDAQ:KMPH)

KemPharm, Inc. (NASDAQ:KMPH) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. KemPharm, Inc., a specialty pharmaceutical company, discovers and develops various proprietary prodrugs to treat serious medical conditions in the United States. With the latest financial year loss of US$63m and a trailing-twelve-month loss of US$35m, the US$193m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on KemPharm's 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.

View our latest analysis for KemPharm

According to the 4 industry analysts covering KemPharm, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$7.9m in 2025. Therefore, the company is expected to breakeven roughly 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 60%, 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
earnings-per-share-growth

Underlying developments driving KemPharm's growth isn’t the focus of this broad overview, but, bear in mind that generally pharmaceuticals, 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.

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One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 17% 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 key fundamentals of KemPharm which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at KemPharm, take a look at KemPharm's company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:

  1. Valuation: What is KemPharm 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 KemPharm 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 KemPharm’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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