Eton Pharmaceuticals, Inc. (NASDAQ:ETON) Is About To Turn The Corner

Eton Pharmaceuticals, Inc. (NASDAQ:ETON) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Eton Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on developing and commercializing pharmaceutical products for rare diseases. With the latest financial year loss of US$28m and a trailing-twelve-month loss of US$14m, the US$202m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Eton Pharmaceuticals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Eton Pharmaceuticals

According to the 2 industry analysts covering Eton Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$6.2m in 2021. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 71% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Eton Pharmaceuticals' growth isn’t the focus of this broad overview, but, take into account that typically 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.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 32% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Eton Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Eton Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Historical Track Record: What has Eton Pharmaceuticals' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Eton Pharmaceuticals' 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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