Analysts Expect Pangaea Oncology, S.A. (BME:PANG) To Breakeven Soon

We feel now is a pretty good time to analyse Pangaea Oncology, S.A.'s (BME:PANG) business as it appears the company may be on the cusp of a considerable accomplishment. Pangaea Oncology, S.A., a medical services company, provides a range of services to cancer patients, and pharmaceutical and biotech clients worldwide. The €28m market-cap company announced a latest loss of €4.8m on 31 December 2019 for its most recent financial year result. The most pressing concern for investors is Pangaea Oncology's 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.

Check out our latest analysis for Pangaea Oncology

Pangaea Oncology is bordering on breakeven, according to some Spanish Life Sciences analysts. They expect the company to post a final loss in 2020, before turning a profit of €700k in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 109%, 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 Pangaea Oncology given that this is a high-level summary, however, bear in mind that generally a life science company has lumpy cash flows which are contingent on the product and stage of development the company 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 issue worth mentioning. Pangaea Oncology currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Pangaea Oncology's case is 45%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Pangaea Oncology 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 Pangaea Oncology, take a look at Pangaea Oncology's company page on Simply Wall St. We've also put together a list of essential aspects you should look at:

1. Valuation: What is Pangaea Oncology 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 Pangaea Oncology 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 Pangaea Oncology’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. 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.
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