Egalet Corporation’s (NASDAQ:EGLT): Egalet Corporation, a specialty pharmaceutical company, develops, manufactures, and commercializes treatments for patients with pain and other conditions. The US$29.69M market-cap company’s loss lessens since it announced a -US$69.36M bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$56.34M, as it approaches breakeven. The most pressing concern for investors is EGLT’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for EGLT.
Expectation from analysts is EGLT is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$2.10M in 2022. So, EGLT is predicted to breakeven approximately 4 years from now. What rate will EGLT have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 52.73%, which is rather optimistic! If this rate turns out to be too aggressive, EGLT may become profitable much later than analysts predict.
Underlying developments driving EGLT’s growth isn’t the focus of this broad overview, however, keep in mind that typically 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.
One thing I would like to bring into light with EGLT is it 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. Oftentimes, losses exist only on paper but other times, it can be a red flag.
There are too many aspects of EGLT to cover in one brief article, but the key fundamentals for the company can all be found in one place – EGLT’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- Historical Track Record: What has EGLT’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 Egalet’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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.