SynBiotic SE (DUSE:SBX) Has Found A Path To Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at SynBiotic SE's (DUSE:SBX) future prospects. SynBiotic SE engages in the research and development, production, and marketing of cannabinoid and terpene-based solutions to for pain, sleep deprivation, and anxiety. The €22m market-cap company announced a latest loss of €11m on 31 December 2023 for its most recent financial year result. Many investors are wondering about the rate at which SynBiotic 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 SynBiotic

SynBiotic is bordering on breakeven, according to the 3 German Pharmaceuticals analysts. They expect the company to post a final loss in 2024, before turning a profit of €500k in 2025. The company is therefore projected to breakeven around 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 107% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving SynBiotic's growth isn’t the focus of this broad overview, but, keep in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 24% 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:

There are too many aspects of SynBiotic to cover in one brief article, but the key fundamentals for the company can all be found in one place – SynBiotic's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

1. Valuation: What is SynBiotic 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 SynBiotic 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 SynBiotic’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.