We believe this is a good time to analyze Avadel Pharmaceuticals plcs (NASDAQ:AVDL) business, as it looks like the company is on the verge of a significant achievement. Avadel Pharmaceuticals plc operates as a biopharmaceutical company in the United States. The US$1.6 billion market cap company’s loss has narrowed since it reported a full-year loss of US$160 million, compared to its last loss of US$157 million in the past twelve months as it nears breakeven. Since the path to profitability is the topic on the minds of Avadel Pharmaceuticals investors, we decided to gauge market sentiment. In this article, we discuss the company’s growth expectations and when analysts expect it to become profitable.

View our latest analysis for Avadel Pharmaceuticals

According to the 9 analysts covering Avadel Pharmaceuticals, the consensus is that the breakeven point is near. They expect the company to make a final loss in 2024, before generating a positive profit of US$59 million in 2025. So the company is expected to breakeven in just over a year. How fast will the company need to grow each year to breakeven in 2025? Working back from analyst estimates, they expect the company to grow 61% year-on-year on average, indicating high confidence from analysts. If this rate turns out to be too aggressive, the company could become profitable much later than analysts predict.

Underlying trends driving Avadel Pharmaceuticals’ growth aren’t the focus of this broad overview, but keep in mind that pharmaceutical companies tend to have irregular periods of cash flow depending on their stage of product development. This means that high future growth rates aren’t out of the ordinary as the company starts to reap the rewards of its past investments.

Before we wrap up, there is one more issue worth mentioning. Avadel Pharmaceuticals currently has a relatively high level of debt. In general, the rule of thumb is that debt should not exceed 40% of your equity, which in the case of Avadel Pharmaceuticals is 44%. Higher debt levels require stricter capital management, which increases the risk of investing in the loss-making company.

Next steps:

There are too many aspects of Avadel Pharmaceuticals to cover in one short article, but the company’s key fundamentals can all be found in one place: the Avadel Pharmaceuticals company page on Simply Wall St. We’ve also compiled a list of relevant factors that you should investigate further:

1. Valuation: What is Avadel Pharmaceuticals worth today? Is future growth potential priced into the price? The intrinsic value infographic in our free research report helps visualize whether Avadel Pharmaceuticals is currently mispriced by the market.
2. The management team:An experienced management team at the helm increases our confidence in the company. Just look at the members of Avadel Pharmaceuticals’ board of directors and the background of the CEO.
3. Other high performing stocks: Are there other stocks that offer better prospects with proven track records? Check out our free list of these great stocks here.

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This article from Simply Wall St is general in nature. We comment solely on historical data and analyst forecasts, using an objective methodology. Our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or financial situation. We aim to provide you with a long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in the shares mentioned.

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