With the business potentially at an important milestone, we thought we'd take a closer look at PTC Therapeutics, Inc.'s (NASDAQ:PTCT) future prospects. PTC Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of medicines for the treatment of rare disorders. With the latest financial year loss of US$252m and a trailing-twelve-month loss of US$432m, the US$3.3b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Therapeutics will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Consensus from 10 of the American Biotechs analysts is that Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$230m in 2023. The company is therefore projected to breakeven around 3 years from now. 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 71% 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.
Underlying developments driving Therapeutics' growth isn’t the focus of this broad overview, though, keep in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Therapeutics is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Therapeutics' case is 55%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Therapeutics' company page on Simply Wall St. We've also compiled a list of key factors you should further research:
- Valuation: What is 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 Therapeutics 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 background.
- 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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