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$16.16M market-cap company’s loss lessens since it announced a -US$26.66M bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$23.53M, as it approaches breakeven. As path to profitability is the topic on CYTX’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for CYTX’s growth and when analysts expect the company to become profitable.
CYTX is bordering on breakeven, according to analysts. They expect the company to post a final loss in 2019, before turning a profit of US$25.48M in 2020. CYTX is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, I calculated the rate at which CYTX must grow year-on-year. It turns out an average annual growth rate of 72.13% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, CYTX may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for CYTX given that this is a high-level summary, though, 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.
Before I wrap up, there’s one issue worth mentioning. CYTX currently has a debt-to-equity ratio of 161.90%. 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 too many aspects of CYTX to cover in one brief article, but the key fundamentals for the company can all be found in one place – CYTX’s company page on Simply Wall St. I’ve also put together a list of important aspects 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 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.