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$3.3m market-cap posted a loss in its most recent financial year of -US$26.7m and a latest trailing-twelve-month loss of -US$21.1m shrinking the gap between loss and breakeven. The most pressing concern for investors is CYTX’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for CYTX, its year of breakeven and its implied growth rate.
Expectation from 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$34.1m in 2021. Therefore, CYTX is expected to breakeven roughly a couple of months from now! What rate will CYTX 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 75.9%, which is rather optimistic! If this rate turns out to be too aggressive, CYTX may become profitable much later than analysts predict.
Underlying developments driving CYTX’s growth isn’t the focus of this broad overview, however, take into account 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.
Before I wrap up, there’s one issue worth mentioning. CYTX currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and CYTX has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of CYTX which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at CYTX, take a look at CYTX’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further examine:
- Valuation: What is CYTX 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 CYTX 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 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.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.