PTC Therapeutics Inc’s (NASDAQ:PTCT): PTC Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of medicines for the treatment of rare disorders. The US$1.8b market-cap company’s loss lessens since it announced a -US$79.0m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$78.5m, as it approaches breakeven. The most pressing concern for investors is PTCT’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for PTCT’s growth and when analysts expect the company to become profitable.
Consensus from the 7 Biotechs analysts is PTCT is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$79m in 2021. PTCT is therefore projected to breakeven around 3 years from today. What rate will PTCT 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 66%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for PTCT given that this is a high-level summary, but, take into account that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one aspect worth mentioning. PTCT has managed its capital judiciously, with debt making up 39% of equity. This means that PTCT has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of PTCT to cover in one brief article, but the key fundamentals for the company can all be found in one place – PTCT’s company page on Simply Wall St. I’ve also put together a list of key factors you should look at:
- Valuation: What is PTCT 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 PTCT is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Therapeutics’s board and the CEO’s back ground.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.