Valbiotis SA (EPA:ALVAL): Are Analysts Optimistic?

Valbiotis SA (EPA:ALVAL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Valbiotis SA engages in the research and development of health nutrition products to prevent and combat metabolic and cardiovascular diseases. The €69m market-cap company’s loss lessened since it announced a €12m loss in the full financial year, compared to the latest trailing-twelve-month loss of €9.1m, as it approaches breakeven. 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

Valbiotis is bordering on breakeven, according to the 3 French Biotechs analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of €7.1m in 2025. The company is therefore projected to breakeven around 2 years from today. 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 74%, 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, but, bear in mind that typically a biotech has lumpy cash flows which are contingent on the product type 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.

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 44%. 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 Valbiotis 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 Valbiotis, take a look at Valbiotis' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Valuation: What is Valbiotis 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 Valbiotis 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 Valbiotis’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.