Geron Corporation's (NASDAQ:GERN) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Geron Corporation's (NASDAQ:GERN) future prospects. Geron Corporation, a late-stage clinical biopharmaceutical company, focuses on the development and commercialization of therapeutics for myeloid hematologic malignancies. The company’s loss has recently broadened since it announced a US$184m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$201m, moving it further away from breakeven. The most pressing concern for investors is Geron's 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 Geron

Consensus from 8 of the American Biotechs analysts is that Geron is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$116m in 2026. The company is therefore projected to breakeven around 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 73%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Geron given that this is a high-level summary, but, keep in mind that typically 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.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 29% 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 Geron to cover in one brief article, but the key fundamentals for the company can all be found in one place – Geron's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is Geron 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 Geron 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 Geron’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.