Pangaea Oncology, S.A.'s (BME:PANG) About To Shift From Loss To Profit

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. With the latest financial year loss of €4.8m and a trailing-twelve-month loss of €4.1m, the €37m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Pangaea Oncology'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 Pangaea Oncology

Expectations from some of the Spanish Life Sciences analysts is that Pangaea Oncology is on the verge of breakeven. 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. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 114% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Pangaea Oncology's upcoming projects, however, take into account that generally life science companies, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Pangaea Oncology is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Pangaea Oncology's case is 63%. A higher level of debt requires more stringent capital management which increases the risk in 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 pertinent aspects you should further examine:

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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