Analysts Expect Breakeven For Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) Before Long

Rhythm Pharmaceuticals -3.92%

Rhythm Pharmaceuticals

RYTM

38.52

-3.92%

With the business potentially at an important milestone, we thought we'd take a closer look at Rhythm Pharmaceuticals, Inc.'s (NASDAQ:RYTM) future prospects. Rhythm Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company, focuses on the rare neuroendocrine diseases. On 31 December 2023, the US$2.6b market-cap company posted a loss of US$185m for its most recent financial year. 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$28m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGM:RYTM Earnings Per Share Growth March 30th 2024

Underlying developments driving Rhythm Pharmaceuticals' growth isn’t the focus of this broad overview, but, keep in mind that generally 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.

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 around investing in the loss-making company.

Next Steps:

There are too many aspects of Rhythm Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Rhythm Pharmaceuticals' company page on Simply Wall St. We've also put together a list of essential factors you should further research:

  1. 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.
  2. 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.
  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.
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