Market Sentiment Around Loss-Making Valbiotis SA (EPA:ALVAL)

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 and control metabolic and cardiovascular diseases in France. On 31 December 2023, the €22m market-cap company posted a loss of €7.4m for its most recent financial year. Many investors are wondering about the rate at which Valbiotis will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View 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 2024, before generating positive profits of €2.8m in 2025. The company is therefore projected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 43%, 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 Valbiotis 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 28% 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 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 important factors you should further examine:

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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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.