SynBiotic SE (DUSE:SBX) Is Expected To Breakeven In The Near Future

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 €26m market-cap company announced a latest loss of €11m on 31 December 2023 for its most recent financial year result. As path to profitability is the topic on SynBiotic's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for SynBiotic

According to the 2 industry analysts covering SynBiotic, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of €700k in 2025. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 105% is expected, 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 SynBiotic given that this is a high-level summary, but, bear 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. 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 judiciously, 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 key fundamentals of SynBiotic 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 SynBiotic, take a look at SynBiotic's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

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.