When Will Eton Pharmaceuticals, Inc. (NASDAQ:ETON) Breakeven?
We feel now is a pretty good time to analyse Eton Pharmaceuticals, Inc.'s (NASDAQ:ETON) business as it appears the company may be on the cusp of a considerable accomplishment. Eton Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on developing, acquiring, and commercializing pharmaceutical products for rare diseases. On 31 December 2022, the US$104m market-cap company posted a loss of US$9.0m for its most recent financial year. Many investors are wondering about the rate at which Eton Pharmaceuticals 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.
See our latest analysis for Eton Pharmaceuticals
Expectations from some of the American Pharmaceuticals analysts is that Eton Pharmaceuticals is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$5.0m in 2024. The company is therefore projected to breakeven just over a year 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 91%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Eton Pharmaceuticals' growth isn’t the focus of this broad overview, however, take into account that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one issue worth mentioning. Eton Pharmaceuticals currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Eton Pharmaceuticals' case is 49%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of Eton Pharmaceuticals 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 Eton Pharmaceuticals, take a look at Eton Pharmaceuticals' company page on Simply Wall St. We've also put together a list of relevant factors you should further research:
Valuation: What is Eton Pharmaceuticals 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 Eton Pharmaceuticals 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 Eton Pharmaceuticals’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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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