Loss-Making Fate Therapeutics Inc (NASDAQ:FATE) Expected To Breakeven

Fate Therapeutics Inc’s (NASDAQ:FATE): Fate Therapeutics, Inc., a clinical-stage biopharmaceutical company, develops programmed cellular immunotherapies for cancer and immune disorders worldwide. The company’s loss has recently broadened since it announced a -US$42.95m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$46.96m, moving it further away from breakeven. Many investors are wondering the rate at which FATE 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 FATE.

Check out our latest analysis for Fate Therapeutics

FATE is bordering on breakeven, according to Biotechs analysts. They expect the company to post a final loss in 2021, before turning a profit of US$82.57m in 2022. Therefore, FATE is expected to breakeven roughly a few months from now. How fast will FATE 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 42.90% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, FATE may become profitable much later than analysts predict.

NasdaqGM:FATE Past Future Earnings June 19th 18
NasdaqGM:FATE Past Future Earnings June 19th 18

Underlying developments driving FATE’s growth isn’t the focus of this broad overview, however, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before I wrap up, there’s one aspect worth mentioning. FATE has managed its capital prudently, with debt making up 22.81% of equity. This means that FATE 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:

This article is not intended to be a comprehensive analysis on FATE, so if you are interested in understanding the company at a deeper level, take a look at FATE’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further research:

  1. Historical Track Record: What has FATE’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 Fate Therapeutics’s board and the CEO’s back ground.
  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.