Market Sentiment Around Loss-Making Pluristem Therapeutics Inc. (NASDAQ:PSTI)

We feel now is a pretty good time to analyse Pluristem Therapeutics Inc.'s (NASDAQ:PSTI) business as it appears the company may be on the cusp of a considerable accomplishment. Pluristem Therapeutics Inc., together with its subsidiary, Pluristem Ltd., operates as a bio-therapeutics company in Israel. The US$246m market-cap company posted a loss in its most recent financial year of US$29m and a latest trailing-twelve-month loss of US$31m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Pluristem 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.

View our latest analysis for Pluristem Therapeutics

According to the 3 industry analysts covering Pluristem Therapeutics, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$4.1m in 2023. The company is therefore projected to breakeven around 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 70% year-on-year, on average, 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.

Given this is a high-level overview, we won’t go into details of Pluristem Therapeutics' upcoming projects, however, bear in mind that by and large 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 Pluristem Therapeutics has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which usually has a high level of debt relative to its equity. This means that the company 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:

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

1. Valuation: What is Pluristem Therapeutics 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 Pluristem Therapeutics 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 Pluristem Therapeutics’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. 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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