Apellis Pharmaceuticals, Inc. (NASDAQ:APLS): Is Breakeven Near?

Apellis Pharmaceuticals -0.64%

Apellis Pharmaceuticals

APLS

40.07

-0.64%

With the business potentially at an important milestone, we thought we'd take a closer look at Apellis Pharmaceuticals, Inc.'s (NASDAQ:APLS) future prospects. Apellis Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutic compounds through the inhibition of the complement system for autoimmune and inflammatory diseases. On 31 December 2023, the US$7.1b market-cap company posted a loss of US$529m for its most recent financial year. The most pressing concern for investors is Apellis Pharmaceuticals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Apellis Pharmaceuticals

According to the 16 industry analysts covering Apellis Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$158m in 2025. So, the company is predicted to breakeven just over a year from today. 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 signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGS:APLS Earnings Per Share Growth March 28th 2024

We're not going to go through company-specific developments for Apellis Pharmaceuticals given that this is a high-level summary, however, bear in mind that typically 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.

Before we wrap up, there’s one issue worth mentioning. Apellis Pharmaceuticals currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Apellis Pharmaceuticals' case is 48%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Apellis Pharmaceuticals 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 Apellis Pharmaceuticals, take a look at Apellis Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

  1. Valuation: What is Apellis 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 Apellis 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 Apellis 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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