CytoTools AG (ETR:T5O): Are Analysts Optimistic?

May 11, 2021
  •  Updated
November 27, 2022
XTRA:T5O
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at CytoTools AG's (ETR:T5O) future prospects. CytoTools AG, a biotechnology company, develops a pipeline of disease modifying therapies. The company’s loss has recently broadened since it announced a €1.3m loss in the full financial year, compared to the latest trailing-twelve-month loss of €1.4m, moving it further away from breakeven. The most pressing concern for investors is CytoTools' path to profitability – when will it breakeven? 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 CytoTools

According to the 3 industry analysts covering CytoTools, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of €500k in 2022. So, the company is predicted to breakeven just over a year from today. 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 71% 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.

earnings-per-share-growth
XTRA:T5O Earnings Per Share Growth May 12th 2021

We're not going to go through company-specific developments for CytoTools given that this is a high-level summary, however, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. CytoTools currently has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of CytoTools 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 CytoTools, take a look at CytoTools' company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

  1. Valuation: What is CytoTools 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 CytoTools 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 CytoTools’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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