Bionomics Limited’s (ASX:BNO): Bionomics Limited, a clinical-stage biopharmaceutical company, discovers and develops novel drug candidates for the treatment of central nervous system disorders and cancer in Australia, France, and the United States. The AU$260.70m market-cap company’s loss lessens since it announced a -AU$6.75m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -AU$5.90m, as it approaches breakeven. The most pressing concern for investors is BNO’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for BNO, its year of breakeven and its implied growth rate.See our latest analysis for Bionomics
According to the industry analysts covering BNO, breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$1.20m in 2020. So, BNO is predicted to breakeven approximately a few months from now. How fast will BNO have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 92.12% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, BNO may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of BNO’s upcoming projects, but, take into account that by and large biotechs, 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 issue worth mentioning. BNO currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in BNO’s case is 63.87%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of BNO which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at BNO, take a look at BNO’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- Valuation: What is BNO 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 BNO 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 Bionomics’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.