ChemoCentryx, Inc.'s (NASDAQ:CCXI) Profit Outlook
ChemoCentryx, Inc. (NASDAQ:CCXI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. ChemoCentryx, Inc., a clinical-stage biopharmaceutical company, focuses on the development and commercialization of new medications for inflammatory disorders, autoimmune diseases, and cancer in the United States. On 31 December 2020, the US$4.7b market-cap company posted a loss of US$55m for its most recent financial year. Many investors are wondering about the rate at which ChemoCentryx will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for ChemoCentryx
According to the 8 industry analysts covering ChemoCentryx, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$151m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 53% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for ChemoCentryx given that this is a high-level summary, however, bear in mind that typically 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 The company has managed its capital judiciously, with debt making up 6.0% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on ChemoCentryx, so if you are interested in understanding the company at a deeper level, take a look at ChemoCentryx's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:
Valuation: What is ChemoCentryx 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 ChemoCentryx 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 ChemoCentryx’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.
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