Analysts Expect Breakeven For Valbiotis SA (EPA:ALVAL) Before Long

By
Simply Wall St
Published
March 18, 2022
ENXTPA:ALVAL
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Valbiotis SA's (EPA:ALVAL) future prospects. Valbiotis SA engages in the research and development of health nutrition products to prevent metabolic diseases in response to unmet medical needs. The €59m market-cap company announced a latest loss of €8.7m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is Valbiotis' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Valbiotis

Consensus from 2 of the French Biotechs analysts is that Valbiotis is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of €7.6m in 2023. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 137% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
ENXTPA:ALVAL Earnings Per Share Growth March 18th 2022

We're not going to go through company-specific developments for Valbiotis given that this is a high-level summary, but, bear in mind that typically 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 Valbiotis is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Valbiotis' case is 43%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Valbiotis to cover in one brief article, but the key fundamentals for the company can all be found in one place – Valbiotis' company page on Simply Wall St. We've also compiled a list of key aspects you should further research:

  1. Historical Track Record: What has Valbiotis' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Valbiotis' 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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