Puma Biotechnology, Inc. (NASDAQ:PBYI): When Will It Breakeven?

Puma Biotechnology, Inc.'s (NASDAQ:PBYI): Puma Biotechnology, Inc., a biopharmaceutical company, focuses on the development and commercialization of products to enhance cancer care. The US$477m market-cap posted a loss in its most recent financial year of -US$113.6m and a latest trailing-twelve-month loss of -US$95.1m shrinking the gap between loss and breakeven. As path to profitability is the topic on PBYI’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for PBYI.

See our latest analysis for Puma Biotechnology

According to the 8 industry analysts covering PBYI, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$12m in 2022. PBYI is therefore projected to breakeven around 2 years from today. What rate will PBYI have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 52%, which signals high confidence from analysts. If this rate turns out to be too aggressive, PBYI may become profitable much later than analysts predict.

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

Before I wrap up, there’s one issue worth mentioning. PBYI currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in PBYI’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of PBYI which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at PBYI, take a look at PBYI’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further research:

1. Valuation: What is PBYI 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 PBYI 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 Puma Biotechnology’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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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