Sesen Bio, Inc.'s (NASDAQ:SESN) Profit Outlook

By
Simply Wall St
Published
December 21, 2020

With the business potentially at an important milestone, we thought we'd take a closer look at Sesen Bio, Inc.'s (NASDAQ:SESN) future prospects. Sesen Bio, Inc., a late-stage clinical company, focuses on designing, engineering, developing, and commercializing targeted fusion protein therapeutics (TFPTs) for the treatment patients with cancer. The US$225m market-cap company’s loss lessened since it announced a US$108m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$41m, as it approaches breakeven. The most pressing concern for investors is Sesen Bio's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Sesen Bio

According to the 3 industry analysts covering Sesen Bio, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$12m 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 62% 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.

NasdaqGM:SESN Earnings Per Share Growth December 21st 2020

Underlying developments driving Sesen Bio's growth isn’t the focus of this broad overview, but, take into account that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one issue worth mentioning. Sesen Bio currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

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

  1. Valuation: What is Sesen Bio 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 Sesen Bio 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 Sesen Bio’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. 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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