When Will Newron Pharmaceuticals S.p.A. (VTX:NWRN) Breakeven?

By
Simply Wall St
Published
May 30, 2021
SWX:NWRN
Source: Shutterstock

Newron Pharmaceuticals S.p.A. (VTX:NWRN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Newron Pharmaceuticals S.p.A., a clinical stage biopharmaceutical company, focuses on the research and development, manufacture, and distribution of therapies for the treatment of central and peripheral nervous system, and pain in Italy and the United States. The CHF47m market-cap company announced a latest loss of €21m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Newron Pharmaceuticals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Newron Pharmaceuticals

Newron Pharmaceuticals is bordering on breakeven, according to the 3 Swiss Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of €10m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 51% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
SWX:NWRN Earnings Per Share Growth May 31st 2021

We're not going to go through company-specific developments for Newron Pharmaceuticals given that this is a high-level summary, though, 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Newron Pharmaceuticals is its debt-to-equity ratio of 149%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Newron 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 Newron 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 Newron 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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