Eton Pharmaceuticals, Inc.'s (NASDAQ:ETON) Profit Outlook
Eton Pharmaceuticals, Inc. (NASDAQ:ETON) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Eton Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on developing and commercializing pharmaceutical products for rare diseases. The US$71m market-cap company announced a latest loss of US$2.0m on 31 December 2021 for its most recent financial year result. 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?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Eton Pharmaceuticals
According to the 2 industry analysts covering Eton Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$4.4m in 2023. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 95% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Eton Pharmaceuticals' upcoming projects, however, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 38% 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:
This article is not intended to be a comprehensive analysis on Eton Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Eton Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:
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.
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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.
