Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Catalyst Pharmaceuticals, Inc.’s (NASDAQ:CPRX): Catalyst Pharmaceuticals, Inc., a biopharmaceutical company, focuses on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases. The company’s loss has recently broadened since it announced a -US$18.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$24.9m, moving it further away from breakeven. Many investors are wondering the rate at which CPRX will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for CPRX.
According to the 6 industry analysts covering CPRX, the consensus is breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$37m in 2020. CPRX is therefore projected to breakeven around a couple of months from now! What rate will CPRX have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 57%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving CPRX’s growth isn’t the focus of this broad overview, however, bear in mind 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.
One thing I’d like to point out is that CPRX has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. CPRX currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
This article is not intended to be a comprehensive analysis on CPRX, so if you are interested in understanding the company at a deeper level, take a look at CPRX’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further research:
- Valuation: What is CPRX 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 CPRX 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 Catalyst Pharmaceuticals’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.