When Will Evoke Pharma, Inc. (NASDAQ:EVOK) Turn A Profit?

Evoke Pharma, Inc. (NASDAQ:EVOK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Evoke Pharma, Inc., a specialty pharmaceutical company, primarily focuses on the development and commercialization of drugs for the treatment of gastroenterological disorders and diseases. The US$4.5m market-cap company posted a loss in its most recent financial year of US$7.8m and a latest trailing-twelve-month loss of US$7.1m shrinking the gap between loss and breakeven. As path to profitability is the topic on Evoke Pharma'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.

Check out our latest analysis for Evoke Pharma

According to some industry analysts covering Evoke Pharma, breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$3.2m in 2025. Therefore, the company is expected 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 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 111% 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 Evoke Pharma given that this is a high-level summary, however, keep in mind that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Evoke Pharma currently has a debt-to-equity ratio of 143%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Evoke Pharma's 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 Evoke Pharma'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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com