Zogenix, Inc.’s (NASDAQ:ZGNX): Zogenix, Inc., a pharmaceutical company, develops and commercializes therapies for the treatment of transformative central nervous system disorders in the United States. With the latest financial year loss of -US$123.7m and a trailing-twelve month of -US$385.9m, the US$2.0b market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which ZGNX will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for ZGNX, its year of breakeven and its implied growth rate.
According to the 11 industry analysts covering ZGNX, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$141m in 2022. So, ZGNX is predicted to breakeven approximately 3 years from today. What rate will ZGNX have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 71%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of ZGNX’s upcoming projects, though, keep in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. ZGNX currently has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which usually has a high level of debt relative to its equity. ZGNX currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
This article is not intended to be a comprehensive analysis on ZGNX, so if you are interested in understanding the company at a deeper level, take a look at ZGNX’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further examine:
- Valuation: What is ZGNX 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 ZGNX is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Zogenix’s board and the CEO’s back ground.
- 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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