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When Can We Expect A Profit From Athenex, Inc. (NASDAQ:ATNX)?

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Simply Wall St
·3 min read
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We feel now is a pretty good time to analyse Athenex, Inc.'s (NASDAQ:ATNX) business as it appears the company may be on the cusp of a considerable accomplishment. Athenex, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of various therapies for the treatment of cancer and related conditions in North America and Asia. With the latest financial year loss of US$124m and a trailing-twelve-month loss of US$118m, the US$1.1b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Athenex will turn a profit, with the big question being “when will the company 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 Athenex

According to the 9 industry analysts covering Athenex, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$159m in 2023. The company is therefore projected to breakeven around 2 years from today. 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 64% 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.

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

We're not going to go through company-specific developments for Athenex given that this is a high-level summary, but, bear in mind that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Athenex is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Athenex's case is 58%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Athenex, so if you are interested in understanding the company at a deeper level, take a look at Athenex's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

  1. Valuation: What is Athenex 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 Athenex 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 Athenex’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 (at) simplywallst.com.