Breakeven Is Near for Ultimovacs ASA (OB:ULTI)

Ultimovacs ASA (OB:ULTI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ultimovacs ASA, a biotech company, develops immunotherapies against cancers. The kr301m market-cap company announced a latest loss of kr189m on 31 December 2023 for its most recent financial year result. Many investors are wondering about the rate at which Ultimovacs 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.

Check out our latest analysis for Ultimovacs

According to the 2 industry analysts covering Ultimovacs, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of kr654m in 2024. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 14%, which seems realistic. However, if this rate turns out to be too buoyant, the company may become profitable later than analysts predict.

Underlying developments driving Ultimovacs' growth isn’t the focus of this broad overview, however, take into account 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 a double-digit growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. Ultimovacs currently has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Ultimovacs, so if you are interested in understanding the company at a deeper level, take a look at Ultimovacs' company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is Ultimovacs 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 Ultimovacs 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 Ultimovacs’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. 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.