When Will Mithra Pharmaceuticals SA (EBR:MITRA) Turn A 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. The €1.0b market-cap company announced a latest loss of €92m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Mithra Pharmaceuticals' 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.

See our latest analysis for Mithra Pharmaceuticals

According to the 4 industry analysts covering Mithra Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of €211m in 2022. The company is therefore projected to breakeven just over a year from now. 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 81%, which is rather optimistic! 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 Mithra Pharmaceuticals given that this is a high-level summary, though, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. 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 176%. 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:

There are key fundamentals of Mithra Pharmaceuticals 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 Mithra Pharmaceuticals, take a look at Mithra Pharmaceuticals' company page on Simply Wall St. We've also put together a list of key factors you should further research:

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. 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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