Valneva SE (EPA:VLA) On The Verge Of Breaking Even

Valneva SE (EPA:VLA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Valneva SE, a specialty vaccine company, develops, manufactures, and commercializes prophylactic vaccines for infectious diseases with unmet needs. The €538m market-cap company posted a loss in its most recent financial year of €101m and a latest trailing-twelve-month loss of €24m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Valneva will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Valneva

Valneva is bordering on breakeven, according to the 9 French Biotechs analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of €6.7m in 2024. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 20% year-on-year, on average, which is relatively reasonable. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Valneva given that this is a high-level summary, however, keep in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means a double-digit growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Valneva is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Valneva's case is 96%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Valneva 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 Valneva, take a look at Valneva's company page on Simply Wall St. We've also put together a list of important factors you should further research:

1. Valuation: What is Valneva 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 Valneva 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 Valneva’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.