Mithra Pharmaceuticals SA (EBR:MITRA) About To Shift From Loss To Profit

We feel now is a pretty good time to analyse Mithra Pharmaceuticals SA's (EBR:MITRA) business as it appears the company may be on the cusp of a considerable accomplishment. Mithra Pharmaceuticals SA develops, manufactures, and markets complex therapeutics in the areas of contraception, menopause, and hormone-dependent cancers in Europe and internationally. On 31 December 2021, the €366m market-cap company posted a loss of €117m for its most recent financial year. Many investors are wondering about the rate at which Mithra Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Mithra Pharmaceuticals

Mithra Pharmaceuticals is bordering on breakeven, according to the 4 Belgian Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of €67m in 2022. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 83%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Mithra Pharmaceuticals given that this is a high-level summary, but, take into account that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Mithra Pharmaceuticals is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Mithra Pharmaceuticals 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 Mithra Pharmaceuticals 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 Mithra Pharmaceuticals’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.