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Cytori Therapeutics, Inc.'s (NASDAQ:CYTX): Cytori Therapeutics, Inc., a therapeutics company, together with its subsidiaries, develops regenerative and oncologic therapies from its proprietary cell therapy and nanoparticle platforms for various medical conditions. The US$8.5m market-cap company announced a latest loss of -US$15.1m on 31 December 2018 for its most recent financial year result. The most pressing concern for investors is CYTX’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for CYTX.
Consensus from the 3 Biotechs analysts is CYTX is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$4.5m in 2021. So, CYTX is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, I calculated the rate at which CYTX must grow year-on-year. It turns out an average annual growth rate of 59% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of CYTX’s upcoming projects, though, bear in mind that generally 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 I wrap up, there’s one issue worth mentioning. CYTX currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in CYTX’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of CYTX to cover in one brief article, but the key fundamentals for the company can all be found in one place – CYTX’s company page on Simply Wall St. I’ve also put together a list of important factors you should look at:
- Historical Track Record: What has CYTX'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 Cytori Therapeutics’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 firstname.lastname@example.org. 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.