Xspray Pharma AB (publ)'s (STO:XSPRAY) About To Shift From Loss To Profit

Simply Wall St
September 14, 2020
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We feel now is a pretty good time to analyse Xspray Pharma AB (publ)'s (STO:XSPRAY) business as it appears the company may be on the cusp of a considerable accomplishment. Xspray Pharma AB (publ) engages in developing protein kinase inhibitors for targeted cancer treatments in Sweden. The kr2.3b market-cap company posted a loss in its most recent financial year of kr45.8m and a latest trailing-twelve-month loss of kr54.5m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Xspray Pharma 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.

Check out our latest analysis for Xspray Pharma

Xspray Pharma is bordering on breakeven, according to some Swedish Biotechs analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of kr108m in 2020. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 112%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

OM:XSPRAY Earnings Per Share Growth September 15th 2020

Given this is a high-level overview, we won’t go into details of Xspray Pharma's upcoming projects, however, bear in mind 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Xspray Pharma 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:

There are too many aspects of Xspray Pharma to cover in one brief article, but the key fundamentals for the company can all be found in one place – Xspray Pharma's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

  1. Valuation: What is Xspray Pharma 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 Xspray Pharma 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 Xspray Pharma’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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