Adocia SA (EPA:ADOC) On The Verge Of Breaking Even

We feel now is a pretty good time to analyse Adocia SA's (EPA:ADOC) business as it appears the company may be on the cusp of a considerable accomplishment. Adocia SA, a clinical-stage biotechnology company, researches and develops formulations of pre-approved therapeutic proteins and peptides for the treatment of diabetes and other metabolic diseases. On 31 December 2023, the €82m market-cap company posted a loss of €21m for its most recent financial year. As path to profitability is the topic on Adocia's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Adocia

Expectations from some of the French Biotechs analysts is that Adocia is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of €15m in 2024. 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 63%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Adocia's upcoming projects, though, bear in mind that generally 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.

One thing we would like to bring into light with Adocia is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

This article is not intended to be a comprehensive analysis on Adocia, so if you are interested in understanding the company at a deeper level, take a look at Adocia's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is Adocia 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 Adocia 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 Adocia’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.