Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) Is Expected To Breakeven In The Near Future

Madrigal Pharmaceuticals, Inc. -3.54%

Madrigal Pharmaceuticals, Inc.




We feel now is a pretty good time to analyse Madrigal Pharmaceuticals, Inc.'s (NASDAQ:MDGL) business as it appears the company may be on the cusp of a considerable accomplishment. Madrigal Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focuses on the development of therapeutics for the treatment of non-alcoholic steatohepatitis (NASH) in the United States. The company’s loss has recently broadened since it announced a US$295m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$347m, moving it further away from breakeven. Many investors are wondering about the rate at which Madrigal Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Madrigal Pharmaceuticals

According to the 12 industry analysts covering Madrigal Pharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$57m in 2025. Therefore, the company is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 73% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGS:MDGL Earnings Per Share Growth December 30th 2023

Underlying developments driving Madrigal Pharmaceuticals' growth isn’t the focus of this broad overview, however, keep in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. 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. Madrigal Pharmaceuticals currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Madrigal 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 Madrigal 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 Madrigal 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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