Diurnal Group plc (LON:DNL): When Will It Breakeven?

Diurnal Group plc (LON:DNL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Diurnal Group plc operates as a specialty pharma company worldwide. The UK£91m market-cap company announced a latest loss of UK£4.1m on 30 June 2020 for its most recent financial year result. The most pressing concern for investors is Diurnal Group's path to profitability – when will it 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 Diurnal Group

Diurnal Group is bordering on breakeven, according to the 3 British Biotechs analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£956k in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 64% is expected, 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.

Underlying developments driving Diurnal Group's growth isn’t the focus of this broad overview, however, bear in mind that typically 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’d like to point out is that The company has managed its capital prudently, with debt making up 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 Diurnal Group 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 Diurnal Group, take a look at Diurnal Group's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Valuation: What is Diurnal Group 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 Diurnal Group 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 Diurnal Group’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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