Spectrum Pharmaceuticals Inc’s (NASDAQ:SPPI) Shift From Loss To Profit

Spectrum Pharmaceuticals Inc’s (NASDAQ:SPPI): Spectrum Pharmaceuticals, Inc. develops and commercializes oncology and hematology drug products. With the latest financial year loss of -US$91.25m and a trailing-twelve month of -US$83.52m, the US$2.24b market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is SPPI’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for SPPI.

See our latest analysis for Spectrum Pharmaceuticals

SPPI is bordering on breakeven, according to Biotechs analysts. They expect the company to post a final loss in 2020, before turning a profit of US$126.50m in 2021. Therefore, SPPI is expected to breakeven roughly a couple of months from now! How fast will SPPI have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 64.48% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGS:SPPI Past Future Earnings June 28th 18
NasdaqGS:SPPI Past Future Earnings June 28th 18

Given this is a high-level overview, I won’t go into details of SPPI’s upcoming projects, but, bear in mind that generally biotechs, 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 I’d like to point out is that SPPI has managed its capital prudently, with debt making up 11.97% of equity. This means that SPPI has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of SPPI 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 SPPI, take a look at SPPI’s company page on Simply Wall St. I’ve also compiled a list of important factors you should further research:

  1. Valuation: What is SPPI 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 SPPI 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 Spectrum Pharmaceuticals’s board and the CEO’s back ground.
  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.