Market Sentiment Around Loss-Making Geron Corporation (NASDAQ:GERN)

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 commercial-stage biopharmaceutical company, focuses on the development of therapeutics products for oncology. The US$790m market-cap company posted a loss in its most recent financial year of US$175m and a latest trailing-twelve-month loss of US$139m shrinking the gap between loss and 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.

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Geron is bordering on breakeven, according to the 9 American Biotechs analysts. They expect the company to post a final loss in 2026, before turning a profit of US$70m in 2027. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 69% 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.

We're not going to go through company-specific developments for Geron given that this is a high-level summary, however, keep in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

View our latest analysis for Geron

Before we wrap up, there’s one issue worth mentioning. Geron currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Geron's case is 44%. 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 key fundamentals of Geron which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Geron, take a look at Geron's company page on Simply Wall St. We've also put together a list of pertinent factors 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.