GenSight Biologics S.A. (EPA:SIGHT): Is Breakeven Near?

GenSight Biologics S.A. (EPA:SIGHT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. GenSight Biologics S.A., a clinical-stage biotechnology company, engages in the discovery, development, and commercialization of therapies for mitochondrial and neurodegenerative diseases of the eye and central nervous system. The €451m market-cap company announced a latest loss of €34m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is GenSight Biologics' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for GenSight Biologics

According to the 2 industry analysts covering GenSight Biologics, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of €26m in 2023. So, the company is predicted to breakeven approximately 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 65% year-on-year, on average, 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 GenSight Biologics given that this is a high-level summary, though, 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.

Before we wrap up, there’s one issue worth mentioning. GenSight Biologics currently has a debt-to-equity ratio of 142%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of GenSight Biologics 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 GenSight Biologics, take a look at GenSight Biologics' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Valuation: What is GenSight Biologics 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 GenSight Biologics 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 GenSight Biologics’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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