Stock Analysis

OncoZenge AB (publ)'s (STO:ONCOZ) Shift From Loss To Profit

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OncoZenge AB (publ) (STO:ONCOZ) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. OncoZenge AB (publ), a pharmaceutical company, develops treatment for pain relief in patients suffering from oral pain caused by radiation therapy and chemotherapy for cancer in Sweden. On 31 December 2022, the kr76m market-cap company posted a loss of kr47m for its most recent financial year. Many investors are wondering about the rate at which OncoZenge 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 OncoZenge, breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of kr23m in 2024. The company is therefore projected to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 42% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

OM:ONCOZ Earnings Per Share Growth March 25th 2023

Given this is a high-level overview, we won’t go into details of OncoZenge's upcoming projects, however, 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.

One thing we’d like to point out is that OncoZenge has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which typically has high 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:

There are key fundamentals of OncoZenge 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 OncoZenge, take a look at OncoZenge's company page on Simply Wall St. We've also put together a list of important factors you should further examine:

  1. Valuation: What is OncoZenge 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 OncoZenge 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 OncoZenge’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.

Valuation is complex, but we're helping make it simple.

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