Onxeo SA's (EPA:ONXEO) Profit Outlook

With the business potentially at an important milestone, we thought we'd take a closer look at Onxeo SA's (EPA:ONXEO) future prospects. Onxeo SA, a clinical-stage biotechnology company, designs and develops oncology drugs for tumor DNA repair functions worldwide. The €58m market-cap company’s loss lessened since it announced a €34m loss in the full financial year, compared to the latest trailing-twelve-month loss of €20m, as it approaches breakeven. As path to profitability is the topic on Onxeo's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Onxeo

Onxeo is bordering on breakeven, according to the 2 French Biotechs analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of €2.0m in 2022. So, the company is predicted to breakeven approximately 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 81%, 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 Onxeo given that this is a high-level summary, but, keep 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’d like to point out is that The company has managed its capital prudently, with debt making up 15% 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 key fundamentals of Onxeo 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 Onxeo, take a look at Onxeo's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

1. Valuation: What is Onxeo 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 Onxeo 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 Onxeo’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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