When Can We Expect A Profit From Athenex, Inc. (NASDAQ:ATNX)?

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$1.3b market-cap company posted a loss in its most recent financial year of US$124m and a latest trailing-twelve-month loss of US$118m shrinking the gap between loss and breakeven. As path to profitability is the topic on Athenex's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Athenex

Consensus from 9 of the American Biotechs analysts is that Athenex is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$159m in 2023. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which is rather optimistic! 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, but, keep in mind that generally 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 58%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

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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