Orexo AB (publ) (STO:ORX): Are Analysts Optimistic?

Orexo AB (publ) (STO:ORX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Orexo AB (publ), a specialty pharmaceutical company, develops and commercializes pharmaceuticals and digital therapies in the United States, European Union, and internationally. The kr375m market-cap company’s loss lessened since it announced a kr128m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr97m, as it approaches breakeven. The most pressing concern for investors is Orexo's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Orexo

Orexo is bordering on breakeven, according to some Swedish Pharmaceuticals analysts. They expect the company to post a final loss in 2025, before turning a profit of kr15m in 2026. Therefore, the company is expected to breakeven roughly 2 years 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 74% 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 Orexo given that this is a high-level summary, though, take into account that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Orexo currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Orexo 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 Orexo, take a look at Orexo's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Valuation: What is Orexo 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 Orexo 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 Orexo’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.