Alkermes plc. (NASDAQ: ALKS)

Sector: Healthcare Industry: Drug Manufacturers - Specialty & Generic CIK: 0001520262
Market Cap 4.58 Bn
P/B 2.64
P/E 13.52
P/S 3.01
ROIC (Qtr) 16.82
Div Yield % 0.00
Rev 1y % (Qtr) 4.24
Total Debt (Qtr) 71.60 Mn
Debt/Equity (Qtr) 0.04

About

Alkermes plc, a prominent player in the biopharmaceutical industry, is publicly traded on the Nasdaq stock exchange under the symbol ALKS and boasts a market capitalization of over $10 billion. The company's primary focus is on neuroscience, and it has established a strong presence in this field with a portfolio of proprietary commercial products and a pipeline of clinical and preclinical candidates in development. Alkermes' main business activities revolve around the development, manufacture, and marketing of pharmaceutical products for the treatment...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 541.08M provides robust 7.56x coverage of total debt 71.60M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 616.45M provide 92.95x coverage of short-term debt 6.63M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 541.08M provides exceptional 116.41x coverage of interest expenses 4.65M, showing strong debt service capability.
  • Strong tangible asset base of 2.25B provides 31.36x coverage of total debt 71.60M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 492.62M exceeds capital expenditure of 48.46M by 10.16x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 541.08M barely covers its investment activities of (40.72M), with a coverage ratio of -13.29, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (40.72M) provide weak support for R&D spending of 289.10M, which is -0.14x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of 492.62M represents just -1.70x of debt issuance (289.54M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Tangible assets of 2.25B provide limited backing for working capital of 1.27B, which is 1.77x, suggesting increased operational risk in market downturns.
  • Operating cash flow of 541.08M provides only 1.87x coverage of R&D expenses of 289.10M, suggesting vulnerability in maintaining innovation investments.

Peer comparison

Companies in the Drug Manufacturers - Specialty & Generic
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ZTS Zoetis Inc. 56.15 Bn 21.18 5.98 7.27 Bn
2 TAK Takeda Pharmaceutical Co Ltd 48.92 Bn 221.13 1.66 36.24 Bn
3 HLN Haleon plc 46.13 Bn 25.59 3.29 -
4 TEVA Teva Pharmaceutical Industries Ltd 35.27 Bn 49.54 2.10 17.07 Bn
5 UTHR UNITED THERAPEUTICS Corp 21.76 Bn 17.11 6.95 0.00 Bn
6 VTRS Viatris Inc 14.87 Bn -4.03 1.05 14.44 Bn
7 NBIX Neurocrine Biosciences Inc 14.08 Bn 32.91 5.25 0.43 Bn
8 ELAN Elanco Animal Health Inc 11.64 Bn 323.29 2.54 4.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.77 24.98
EV to Cash from Ops. EV/CFO 7.64 -85.40
EV to Debt EV to Debt 57.70 265.88
EV to EBIT EV/EBIT 10.17 -32.65
EV to EBITDA EV/EBITDA 10.63 -29.50
EV to Free Cash Flow [EV/FCF] EV/FCF 8.39 -32.62
EV to Market Cap EV to Market Cap 0.90 -10.98
EV to Revenue EV/Rev 2.72 -700.14
Price to Book Value [P/B] P/B 2.64 27.22
Price to Earnings [P/E] P/E 13.52 -122.96
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.34
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.81
Dividend per Basic Share Div per Share (Qtr) 0.00 0.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.08
Interest Coverage Int. cover (Qtr) 87.43 -38.10
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -183.57 -157.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 55.55 44,776.25
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.81
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -5.33 24.45
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 10.18 18.14
EBIT Growth (1y) % EBIT 1y % (Qtr) 34.32 37.66
EBT Growth (1y) % EBT 1y % (Qtr) 44.21 108.18
EPS Growth (1y) % EPS 1y % (Qtr) 2.99 52.88
FCF Growth (1y) % FCF 1y % (Qtr) 19.00 -54.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.57 25.28
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.65 0.50
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 1.30 2.10
Current Ratio Curr Ratio (Qtr) 3.67 3.92
Debt to Equity Ratio Debt/Equity (Qtr) 0.04 -1.11
Interest Cover Ratio Int Coverage (Qtr) 87.43 -38.10
Times Interest Earned Times Interest Earned (Qtr) 87.43 -38.10
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 28.70 -62,432.09
EBIT Margin % EBIT Margin % (Qtr) 26.71 -63,260.88
EBT Margin % EBT Margin % (Qtr) 26.41 -66,726.96
Gross Margin % Gross Margin % (Qtr) 86.00 8,332.72
Net Profit Margin % Net Margin % (Qtr) 22.30 -66,728.37