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Retrophin, Inc.’s (NASDAQ:RTRX): Retrophin, Inc., a biopharmaceutical company, focuses on the identification, development, acquisition, and commercialization of therapies for the treatment of rare diseases. The US$783m market-cap posted a loss in its most recent financial year of -US$102.7m and a latest trailing-twelve-month loss of -US$125.3m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on RTRX’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for RTRX, its year of breakeven and its implied growth rate.
RTRX is bordering on breakeven, according to the 7 Biotechs analysts. They expect the company to post a final loss in 2021, before turning a profit of US$204m in 2022. Therefore, RTRX is expected to breakeven roughly 3 years from now. In order to meet this breakeven date, I calculated the rate at which RTRX must grow year-on-year. It turns out an average annual growth rate of 64% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of RTRX’s upcoming projects, but, keep in mind that typically 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.
Before I wrap up, there’s one issue worth mentioning. RTRX currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in RTRX’s case is 81%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of RTRX 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 RTRX, take a look at RTRX’s company page on Simply Wall St. I’ve also compiled a list of important factors you should further research:
- Valuation: What is RTRX 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 RTRX 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 Retrophin’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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.