argenx SE (EBR:ARGX): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at argenx SE's (EBR:ARGX) future prospects. 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 €29b market-cap company posted a loss in its most recent financial year of US$295m and a latest trailing-twelve-month loss of US$204m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which argenx will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for argenx

According to the 27 industry analysts covering argenx, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$437m in 2025. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 58%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for argenx given that this is a high-level summary, however, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. 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 argenx has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of argenx to cover in one brief article, but the key fundamentals for the company can all be found in one place – argenx's company page on Simply Wall St. We've also compiled a list of important aspects 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.