Breakeven On The Horizon For Avid Bioservices, Inc. (NASDAQ:CDMO)
We feel now is a pretty good time to analyse Avid Bioservices, Inc.'s (NASDAQ:CDMO) business as it appears the company may be on the cusp of a considerable accomplishment. Avid Bioservices, Inc., a contract development and manufacturing organization, provides process development and current good manufacturing practices (CGMP) clinical and commercial manufacturing services focused on biopharmaceutical drug substances derived from mammalian cell culture. With the latest financial year loss of US$15m and a trailing-twelve-month loss of US$233k, the US$1.5b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Avid Bioservices' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Avid Bioservices
According to the 4 industry analysts covering Avid Bioservices, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$9.9m in 2022. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 79% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Avid Bioservices' growth isn’t the focus of this broad overview, but, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that Avid Bioservices has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Avid Bioservices, so if you are interested in understanding the company at a deeper level, take a look at Avid Bioservices' company page on Simply Wall St. We've also put together a list of essential factors you should further research:
Valuation: What is Avid Bioservices 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 Avid Bioservices 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 Avid Bioservices’s board and the CEO’s background.
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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
