When Will Immutep Limited (ASX:IMM) Turn A Profit?

By
Simply Wall St
Published
May 30, 2021
ASX:IMM
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Immutep Limited's (ASX:IMM) future prospects. Immutep Limited, a biotech company, engages in the research and development of pharmaceutical product candidates. With the latest financial year loss of AU$13m and a trailing-twelve-month loss of AU$27m, the AU$449m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Immutep's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Immutep

According to the 3 industry analysts covering Immutep, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of AU$90m in 2024. Therefore, the company is expected to breakeven roughly 3 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 83% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ASX:IMM Earnings Per Share Growth May 31st 2021

We're not going to go through company-specific developments for Immutep given that this is a high-level summary, 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.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 16% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Immutep which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Immutep, take a look at Immutep's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

  1. Valuation: What is Immutep 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 Immutep 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 Immutep’s board and the CEO’s background.
  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.

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