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When Will Eton Pharmaceuticals, Inc. (NASDAQ:ETON) Breakeven?

Simply Wall St
·3 mins read

Eton Pharmaceuticals, Inc.'s (NASDAQ:ETON): Eton Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on developing and commercializing pharmaceutical products. The company’s loss has recently broadened since it announced a US$18.3m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$20.0m, moving it further away from breakeven. Many investors are wondering the rate at which ETON will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for ETON, its year of breakeven and its implied growth rate.

Check out our latest analysis for Eton Pharmaceuticals

ETON is bordering on breakeven, according to the 3 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$11m in 2023. So, ETON is predicted to breakeven approximately 3 years from now. What rate will ETON 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 70%, which is extremely buoyant. If this rate turns out to be too aggressive, ETON may become profitable much later than analysts predict.

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

Given this is a high-level overview, I won’t go into details of ETON’s upcoming projects, though, bear in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with ETON is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in ETON’s case is 43%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of ETON to cover in one brief article, but the key fundamentals for the company can all be found in one place – ETON’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should look at:

  1. Valuation: What is ETON 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 is currently mispriced by the market.

  2. 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 back ground.

  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.