Zogenix, Inc.’s (NASDAQ:ZGNX): Zogenix, Inc., a pharmaceutical company, develops and commercializes therapies for the treatment of transformative central nervous system disorders in the United States. The company’s loss has recently broadened since it announced a -US$123.7m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$128.7m, moving it further away from breakeven. The most pressing concern for investors is ZGNX’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for ZGNX, its year of breakeven and its implied growth rate.
According to the 10 industry analysts covering ZGNX, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$34m in 2021. Therefore, ZGNX is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which ZGNX must grow year-on-year. It turns out an average annual growth rate of 71% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, ZGNX may become profitable much later than analysts predict.
Underlying developments driving ZGNX’s growth isn’t the focus of this broad overview, but, take into account that generally 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.
Before I wrap up, there’s one aspect worth mentioning. ZGNX currently has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which usually has a high level of debt relative to its equity. ZGNX currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are key fundamentals of ZGNX 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 ZGNX, take a look at ZGNX’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:
- Valuation: What is ZGNX 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 ZGNX is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Zogenix’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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.