Breakeven On The Horizon For Global Blood Therapeutics, Inc. (NASDAQ:GBT)

We feel now is a pretty good time to analyse Global Blood Therapeutics, Inc.'s (NASDAQ:GBT) business as it appears the company may be on the cusp of a considerable accomplishment. Global Blood Therapeutics, Inc., a clinical-stage biopharmaceutical company, engages in the discovery, development, and delivery of treatments for underserved patient communities. The company’s loss has recently broadened since it announced a US$267m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$282m, moving it further away from breakeven. Many investors are wondering about the rate at which Global Blood Therapeutics will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Global Blood Therapeutics

According to the 19 industry analysts covering Global Blood Therapeutics, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$124m in 2023. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 62% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Global Blood Therapeutics' upcoming projects, however, take into account that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 16% 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:

This article is not intended to be a comprehensive analysis on Global Blood Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Global Blood Therapeutics' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

1. Valuation: What is Global Blood Therapeutics 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 Global Blood Therapeutics is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Global Blood Therapeutics’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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