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We feel now is a pretty good time to analyse Outlook Therapeutics, Inc.'s (NASDAQ:OTLK) business as it appears the company may be on the cusp of a considerable accomplishment. Outlook Therapeutics, Inc., a late clinical-stage biopharmaceutical company, focuses on developing and commercializing monoclonal antibodies for various ophthalmic indications. With the latest financial year loss of US$36.0m and a trailing-twelve-month loss of US$49.2m, the US$163m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Outlook Therapeutics 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.
According to the 5 industry analysts covering Outlook Therapeutics, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$91m in 2023. So, the company is predicted to breakeven approximately 3 years 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 82% is expected, which is rather optimistic! 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 Outlook Therapeutics' upcoming projects, but, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we would like to bring into light with Outlook Therapeutics is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Outlook Therapeutics' case is 42%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Outlook Therapeutics 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 Outlook Therapeutics, take a look at Outlook Therapeutics' company page on Simply Wall St. We've also compiled a list of important factors you should further research:
Historical Track Record: What has Outlook Therapeutics' 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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Outlook Therapeutics' 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.
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.
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