Breakeven Is Near for Alzinova AB (publ) (STO:ALZ)

We feel now is a pretty good time to analyse Alzinova AB (publ)'s (STO:ALZ) business as it appears the company may be on the cusp of a considerable accomplishment. Alzinova AB (publ), a biopharma company, engages in the development of an active immunotherapy for the treatment of Alzheimer’s disease in Sweden. The kr105m market-cap company posted a loss in its most recent financial year of kr13m and a latest trailing-twelve-month loss of kr16m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Alzinova's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Alzinova

Alzinova is bordering on breakeven, according to some Swedish Biotechs analysts. They expect the company to post a final loss in 2023, before turning a profit of kr156m in 2024. Therefore, the company is expected to breakeven roughly 12 months 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 235% year-on-year, on average, which signals high confidence from analysts. 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 Alzinova given that this is a high-level summary, though, bear in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 0.7% 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:

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

1. Valuation: What is Alzinova 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 Alzinova 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 Alzinova’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.