Analysts Are Optimistic We'll See A Profit From argenx SE (EBR:ARGX)

We feel now is a pretty good time to analyse argenx SE's (EBR:ARGX) business as it appears the company may be on the cusp of a considerable accomplishment. argenx SE, a biotechnology company, engages in the developing of various therapies for the treatment of autoimmune diseases in the United States, Japan, Europe, Middle East, Africa, and China. The €38b market-cap company posted a loss in its most recent financial year of US$295m and a latest trailing-twelve-month loss of US$40m shrinking the gap between loss and breakeven. As path to profitability is the topic on argenx'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.

See our latest analysis for argenx

Consensus from 28 of the Belgian Biotechs analysts is that argenx is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$646m in 2025. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 42% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of argenx's upcoming projects, though, keep in mind that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 0.8% 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:

This article is not intended to be a comprehensive analysis on argenx, so if you are interested in understanding the company at a deeper level, take a look at argenx's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

1. Valuation: What is argenx 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 argenx 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 argenx’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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.