Stock Analysis

Valbiotis SA (EPA:ALVAL) Is Expected To Breakeven In The Near Future

ENXTPA:ALVAL
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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 develops nutrition solutions to prevent cardio metabolic diseases and provides nutritional support for patients. The company’s loss has recently broadened since it announced a €5.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of €5.7m, moving it further away from breakeven. As path to profitability is the topic on Valbiotis' 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.

Check out our latest analysis for Valbiotis

Valbiotis is bordering on breakeven, according to the 3 French Biotechs analysts. They expect the company to post a final loss in 2022, before turning a profit of €9.4m in 2023. So, the company is predicted to breakeven approximately 2 years from now. 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 53% 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 8th 2021

Underlying developments driving Valbiotis' growth isn’t the focus of this broad overview, however, take into account 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 37% 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:

This article is not intended to be a comprehensive analysis on Valbiotis, so if you are interested in understanding the company at a deeper level, take a look at Valbiotis' company page on Simply Wall St. We've also compiled a list of key factors 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. 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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