When Will Shield Therapeutics plc (LON:STX) Turn A Profit?

We feel now is a pretty good time to analyse Shield Therapeutics plc's (LON:STX) business as it appears the company may be on the cusp of a considerable accomplishment. Shield Therapeutics plc, a commercial stage specialty pharmaceutical company, focuses on commercialization of pharmaceuticals to treat unmet medical needs. On 31 December 2023, the UK£17m market-cap company posted a loss of US$33m for its most recent financial year. As path to profitability is the topic on Shield Therapeutics' investors mind, we've decided to gauge market sentiment. 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 Shield Therapeutics

Shield Therapeutics is bordering on breakeven, according to the 2 British Pharmaceuticals analysts. They expect the company to post a final loss in 2024, before turning a profit of US$15m in 2025. So, the company is predicted to breakeven just over a year 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 111%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Shield Therapeutics' upcoming projects, though, keep in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. 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. Shield Therapeutics currently has a debt-to-equity ratio of 132%. Generally, the rule of thumb is 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 around investing in the loss-making company.

Next Steps:

There are too many aspects of Shield Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Shield Therapeutics' company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

1. Valuation: What is Shield Therapeutics 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 Shield Therapeutics 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 Shield Therapeutics’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.

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