Analysts Expect Breakeven For GenSight Biologics S.A. (EPA:SIGHT) Before Long

With the business potentially at an important milestone, we thought we'd take a closer look at GenSight Biologics S.A.'s (EPA:SIGHT) future prospects. GenSight Biologics S.A., a clinical-stage biotechnology company, engages in the discovery and development of therapies for mitochondrial and neurodegenerative diseases of the eye and central nervous system. The €288m market-cap company posted a loss in its most recent financial year of €31m and a latest trailing-twelve-month loss of €27m shrinking the gap between loss and breakeven. The most pressing concern for investors is GenSight Biologics' 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 GenSight Biologics

GenSight Biologics 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 €14m in 2023. The company is therefore projected to breakeven around 2 years from today. 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 60% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of GenSight Biologics' upcoming projects, but, bear in mind 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 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 issue worth mentioning. GenSight Biologics currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in GenSight Biologics' case is 70%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of GenSight Biologics to cover in one brief article, but the key fundamentals for the company can all be found in one place – GenSight Biologics' company page on Simply Wall St. We've also put together a list of key aspects you should look at:

1. Historical Track Record: What has GenSight Biologics' 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 GenSight Biologics' 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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