When Can We Expect A Profit From Bionomics Limited (ASX:BNO)?

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$272.76M 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? In this article, I will touch on the expectations for BNO’s growth and when analysts expect the company to become profitable.

See our latest analysis for Bionomics

BNO is bordering on breakeven, according to analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$1.20M in 2020. BNO is therefore projected to breakeven around 2 years from today. 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 signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

ASX:BNO Past Future Earnings Jun 6th 18
ASX:BNO Past Future Earnings Jun 6th 18

I’m not going to go through company-specific developments for BNO given that this is a high-level summary, but, take into account that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. 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.

Next Steps:

There are too many aspects of BNO to cover in one brief article, but the key fundamentals for the company can all be found in one place – BNO’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:

  1. 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.
  2. 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.
  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.