We feel now is a pretty good time to analyse Atea Pharmaceuticals, Inc.'s (NASDAQ:AVIR) business as it appears the company may be on the cusp of a considerable accomplishment. Atea Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focused on discovering, developing, and commercializing antiviral therapeutics for patients suffering from viral infections. The US$1.6b market-cap company announced a latest loss of US$11m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Atea Pharmaceuticals 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.
According to the 3 industry analysts covering Atea Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$1.9b in 2022. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 83% year-on-year, on average, which signals high confidence from analysts. 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 Atea Pharmaceuticals given that this is a high-level summary, but, take into account that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. 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 aspect worth mentioning. Atea Pharmaceuticals currently has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which typically has high debt relative to its equity. This means that the company 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.
This article is not intended to be a comprehensive analysis on Atea Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Atea Pharmaceuticals' company page on Simply Wall St. We've also put together a list of important aspects you should further research:
- Valuation: What is Atea Pharmaceuticals 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 Atea Pharmaceuticals 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 Atea Pharmaceuticals’s board and the CEO’s background.
- 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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Atea Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focused on discovering, developing, and commercializing antiviral therapeutics for patients suffering from viral infections.
Flawless balance sheet and good value.