Stock Analysis

SCYNEXIS, Inc. (NASDAQ:SCYX): Are Analysts Optimistic?

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NasdaqGM:SCYX
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With the business potentially at an important milestone, we thought we'd take a closer look at SCYNEXIS, Inc.'s (NASDAQ:SCYX) future prospects. SCYNEXIS, Inc., a biotechnology company, delivers therapies for the treatment fungal infections in the United States. The US$84m market-cap company’s loss lessened since it announced a US$54m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$27m, as it approaches breakeven. As path to profitability is the topic on SCYNEXIS' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for SCYNEXIS

According to the 6 industry analysts covering SCYNEXIS, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$30m in 2023. Therefore, the company is expected to breakeven roughly 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 72% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGM:SCYX Earnings Per Share Growth December 15th 2020

Underlying developments driving SCYNEXIS' growth isn’t the focus of this broad overview, however, keep in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. 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 SCYNEXIS is its debt-to-equity ratio of 112%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of SCYNEXIS to cover in one brief article, but the key fundamentals for the company can all be found in one place – SCYNEXIS' company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

  1. Valuation: What is SCYNEXIS 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 SCYNEXIS 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 SCYNEXIS’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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What are the risks and opportunities for SCYNEXIS?

SCYNEXIS, Inc., a biotechnology company, develops products for the treatment fungal infections in the United States.

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Rewards

  • Trading at 98.8% below our estimate of its fair value

  • Revenue is forecast to grow 58.26% per year

Risks

  • Has less than 1 year of cash runway

  • Does not have a meaningful market cap ($57M)

  • Shareholders have been diluted in the past year

  • Does not have meaningful revenue ($4M)

  • Volatile share price over the past 3 months

  • Currently unprofitable and not forecast to become profitable over the next 3 years

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