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Breakeven Is Near for Dynavax Technologies Corporation (NASDAQ:DVAX)

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·3 min read
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Dynavax Technologies Corporation (NASDAQ:DVAX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Dynavax Technologies Corporation, a biopharmaceutical company, focuses on developing and commercializing novel vaccines in the United States. The US$1.6b market-cap company posted a loss in its most recent financial year of US$75m and a latest trailing-twelve-month loss of US$5.7m shrinking the gap between loss and breakeven. As path to profitability is the topic on Dynavax Technologies' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Dynavax Technologies

Consensus from 5 of the American Biotechs analysts is that Dynavax Technologies is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$54m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of -14% is expected,

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Dynavax Technologies given that this is a high-level summary, though, take into account that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. So, periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Dynavax Technologies is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Dynavax Technologies which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Dynavax Technologies, take a look at Dynavax Technologies' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

  1. Valuation: What is Dynavax Technologies 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 Dynavax Technologies 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 Dynavax Technologies’s board and the CEO’s background.

  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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.