Mayne Pharma Group Limited's (ASX:MYX) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Mayne Pharma Group Limited's (ASX:MYX) future prospects. Mayne Pharma Group Limited, a specialty pharmaceutical company, manufactures and sells branded and generic pharmaceutical products in Australia, the United States, Korea, and internationally. On 30 June 2020, the AU$596m market-cap company posted a loss of AU$93m for its most recent financial year. As path to profitability is the topic on Mayne Pharma Group's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Mayne Pharma Group

According to the 6 industry analysts covering Mayne Pharma Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$18m in 2022. Therefore, the company is expected to breakeven just over a year from now. 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 107% is expected, which is extremely buoyant. 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, we won’t go into details of Mayne Pharma Group's upcoming projects, however, keep in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. 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 37% 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 Mayne Pharma Group 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 Mayne Pharma Group, take a look at Mayne Pharma Group's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

1. Valuation: What is Mayne Pharma Group 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 Mayne Pharma Group 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 Mayne Pharma Group’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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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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