Market Sentiment Around Loss-Making scPharmaceuticals Inc. (NASDAQ:SCPH)

We feel now is a pretty good time to analyse scPharmaceuticals Inc.'s (NASDAQ:SCPH) business as it appears the company may be on the cusp of a considerable accomplishment. scPharmaceuticals Inc., a pharmaceutical company, engages in the development and commercialization of various pharmaceutical products. The US$184m market-cap company posted a loss in its most recent financial year of US$55m and a latest trailing-twelve-month loss of US$80m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which scPharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for scPharmaceuticals

According to the 6 industry analysts covering scPharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$14m in 2026. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 59% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving scPharmaceuticals' growth isn’t the focus of this broad overview, however, take into account that generally pharmaceuticals, 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.

One thing we would like to bring into light with scPharmaceuticals is its debt-to-equity ratio of 166%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on scPharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at scPharmaceuticals' company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. Valuation: What is scPharmaceuticals 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 scPharmaceuticals 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 scPharmaceuticals’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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.