When Will Merus NV. (NASDAQ:MRUS) Turn A Profit?

Merus NV.’s (NASDAQ:MRUS): Merus N.V., a clinical-stage immuno-oncology company, engages in developing bispecific antibody therapeutics. With the latest financial year loss of -€47.23M and a trailing-twelve month of -€90.79M, the US$355.39M market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which MRUS will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for MRUS’s growth and when analysts expect the company to become profitable.

View our latest analysis for Merus

Expectation from analysts is MRUS is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of €23.76M in 2022. MRUS is therefore projected to breakeven around 4 years from today. How fast will MRUS 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 16.43% year-on-year, on average, which seems relatively fair. However, if this rate turns out to be too buoyant, MRUS may become profitable later than analysts predict.

NasdaqGM:MRUS Past Future Earnings Mar 23rd 18
NasdaqGM:MRUS Past Future Earnings Mar 23rd 18

I’m not going to go through company-specific developments for MRUS given that this is a high-level summary, however, bear in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means a double-digit growth rate is not unusual, especially if the company is currently in an investment period.

Before I wrap up, there’s one aspect worth mentioning. MRUS currently has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which typically has high debt relative to its equity. This means that MRUS has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has MRUS’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 Merus’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.