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Acer Therapeutics Inc.'s (NASDAQ:ACER): Acer Therapeutics Inc., a pharmaceutical company, develops therapies for the treatment of rare diseases with critical unmet medical needs. The company’s loss has recently broadened since it announced a -US$14.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$17.0m, moving it further away from breakeven. Many investors are wondering the rate at which ACER will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for ACER’s growth and when analysts expect the company to become profitable.
View our latest analysis for Acer Therapeutics
Consensus from the 6 Pharmaceuticals analysts is ACER is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$35m in 2021. Therefore, ACER is expected to breakeven roughly 2 years from today. How fast will ACER have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 65% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, ACER may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for ACER given that this is a high-level summary, though, bear in mind that generally pharmaceuticals, 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.
One thing I’d like to point out is that ACER has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which usually has a high level of debt relative to its equity. This means that ACER has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of ACER which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ACER, take a look at ACER’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further examine:
- Valuation: What is ACER 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 ACER is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Acer Therapeutics’s board and the CEO’s back ground.
- 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.