Ovid Therapeutics Inc. (NASDAQ:OVID) Could Be Less Than A Year Away From Profitability

By
Simply Wall St
Published
April 16, 2021
NasdaqGS:OVID

With the business potentially at an important milestone, we thought we'd take a closer look at Ovid Therapeutics Inc.'s (NASDAQ:OVID) future prospects. Ovid Therapeutics Inc., a biopharmaceutical company, develops impactful medicines for patients and families with neurological disorders in the United States. The US$223m market-cap company announced a latest loss of US$81m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Ovid Therapeutics' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Ovid Therapeutics

Ovid Therapeutics is bordering on breakeven, according to the 6 American Biotechs analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$23m in 2021. So, the company is predicted to breakeven approximately a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 53%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGS:OVID Earnings Per Share Growth April 16th 2021

Underlying developments driving Ovid Therapeutics' growth isn’t the focus of this broad overview, but, take into account that typically 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.

Before we wrap up, there’s one aspect worth mentioning. Ovid Therapeutics currently has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of Ovid Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Ovid Therapeutics' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

  1. Historical Track Record: What has Ovid Therapeutics' 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 Ovid Therapeutics' 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. 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.
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