Selecta Biosciences Inc’s (NASDAQ:SELB): Selecta Biosciences, Inc., a clinical-stage biopharmaceutical company, researches and develops nanoparticle immunomodulatory drugs for the treatment and prevention of human diseases. With the latest financial year loss of -US$65m and a trailing-twelve month of -US$69m, the US$127m market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which SELB will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for SELB’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering SELB, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$50m in 2021. So, SELB is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which SELB must grow year-on-year. It turns out an average annual growth rate of 66% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, SELB may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for SELB given that this is a high-level summary, however, 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 I would like to bring into light with SELB is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in SELB’s case is 87%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of SELB 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 SELB, take a look at SELB’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should look at:
- Historical Track Record: What has SELB’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Selecta Biosciences’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.