Market Sentiment Around Loss-Making Isofol Medical AB (publ) (STO:ISOFOL)

We feel now is a pretty good time to analyse Isofol Medical AB (publ)'s (STO:ISOFOL) business as it appears the company may be on the cusp of a considerable accomplishment. Isofol Medical AB (publ), a biotech company, develops, commercializes, and sells oncology drugs in Sweden and internationally. On 31 December 2020, the kr1.6b market-cap company posted a loss of kr189m for its most recent financial year. Many investors are wondering about the rate at which Isofol Medical will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Isofol Medical

Consensus from 4 of the Swedish Biotechs analysts is that Isofol Medical is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of kr212m in 2023. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 74% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Isofol Medical's growth isn’t the focus of this broad overview, though, take into account 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up -2.1% 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 Isofol Medical 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 Isofol Medical, take a look at Isofol Medical's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

1. Valuation: What is Isofol Medical 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 Isofol Medical 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 Isofol Medical’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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