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Epizyme, Inc. (NASDAQ:EPZM): Are Analysts Optimistic?

Simply Wall St
·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at Epizyme, Inc.'s (NASDAQ:EPZM) future prospects. Epizyme, Inc., a late-stage biopharmaceutical company, discovers, develops, and commercializes novel epigenetic medicines for patients with cancer and other diseases. With the latest financial year loss of US$173m and a trailing-twelve-month loss of US$222m, the US$1.0b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Epizyme's path to profitability – when will it breakeven? 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 Epizyme

Consensus from 5 of the American Biotechs analysts is that Epizyme is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$139m in 2023. Therefore, the company is expected to breakeven roughly 3 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 71%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

We're not going to go through company-specific developments for Epizyme given that this is a high-level summary, though, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 25% 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:

There are too many aspects of Epizyme to cover in one brief article, but the key fundamentals for the company can all be found in one place – Epizyme's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

  1. Historical Track Record: What has Epizyme'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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Epizyme'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. 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@simplywallst.com.