Athenex, Inc. (NASDAQ:ATNX): When Will It Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Athenex, Inc.'s (NASDAQ:ATNX) future prospects. Athenex, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of various therapies for the treatment of cancer and related conditions in North America and Asia. The US$1.2b market-cap company’s loss lessened since it announced a US$124m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$116m, as it approaches breakeven. As path to profitability is the topic on Athenex's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Athenex

According to the 8 industry analysts covering Athenex, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$28m in 2022. The company is therefore projected to breakeven around 2 years from now. 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 76% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Athenex's growth isn’t the focus of this broad overview, though, take into account that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. 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 issue worth mentioning. Athenex currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Athenex's case is 76%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Athenex, so if you are interested in understanding the company at a deeper level, take a look at Athenex's company page on Simply Wall St. We've also put together a list of important aspects you should look at:

1. Valuation: What is Athenex 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 Athenex 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 Athenex’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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