When Will Zealand Pharma A/S (CPH:ZEAL) Turn A Profit?

We feel now is a pretty good time to analyse Zealand Pharma A/S' (CPH:ZEAL) business as it appears the company may be on the cusp of a considerable accomplishment. Zealand Pharma A/S, a biotechnology company, engages in the discovery, development, and commercialization of peptide-based medicines in Denmark. The company’s loss has recently broadened since it announced a kr.704m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr.1.1b, moving it further away from breakeven. As path to profitability is the topic on Zealand Pharma's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Zealand Pharma

Zealand Pharma is bordering on breakeven, according to the 12 Danish Biotechs analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of kr.220m in 2025. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 74% 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.

We're not going to go through company-specific developments for Zealand Pharma given that this is a high-level summary, though, bear in mind that by and large biotechs, 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 judiciously, with debt making up 3.2% 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 Zealand Pharma to cover in one brief article, but the key fundamentals for the company can all be found in one place – Zealand Pharma's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:

1. Valuation: What is Zealand Pharma 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 Zealand Pharma 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 Zealand Pharma’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.