We Might See A Profit From Active Biotech AB (publ) (STO:ACTI) Soon

We feel now is a pretty good time to analyse Active Biotech AB (publ)'s (STO:ACTI) business as it appears the company may be on the cusp of a considerable accomplishment. Active Biotech AB (publ), a biotechnology company, engages in the research, development, and production of pharmaceutical products in Sweden. The kr95m market-cap company posted a loss in its most recent financial year of kr39m and a latest trailing-twelve-month loss of kr40m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Active Biotech 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.

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According to some industry analysts covering Active Biotech, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of kr840k in 2025. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 109% is expected, which is extremely buoyant. 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 Active Biotech given that this is a high-level summary, but, take into account that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Check out our latest analysis for Active Biotech

One thing we’d like to point out is that Active Biotech 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 Active Biotech, so if you are interested in understanding the company at a deeper level, take a look at Active Biotech's company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

1. Historical Track Record: What has Active Biotech's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Active Biotech'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.