Valbiotis SA (EPA:ALVAL): When Will It Breakeven?

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. The €64m 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. The most pressing concern for investors is Valbiotis' path to profitability – when will it breakeven? 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 anticipate the company to incur a final loss in 2024, before generating positive profits of €3.2m 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 63%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Valbiotis' growth isn’t the focus of this broad overview, but, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Valbiotis is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Valbiotis' case is 44%. Note that a higher debt obligation increases the risk around 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 put together a list of essential factors 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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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.