Zynerba Pharmaceuticals, Inc.'s (NASDAQ:ZYNE): Zynerba Pharmaceuticals, Inc. operates as a clinical stage specialty pharmaceutical company. The US$270m market-cap posted a loss in its most recent financial year of -US$39.9m and a latest trailing-twelve-month loss of -US$35.9m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which ZYNE 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 ZYNE, its year of breakeven and its implied growth rate.
ZYNE is bordering on breakeven, according to the 6 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$65m in 2022. Therefore, ZYNE is expected to breakeven roughly 3 years from now. In order to meet this breakeven date, I calculated the rate at which ZYNE must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, ZYNE may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for ZYNE given that this is a high-level summary, but, take into account that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. ZYNE has managed its capital judiciously, with debt making up -0.02% of equity. This means that ZYNE has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on ZYNE, so if you are interested in understanding the company at a deeper level, take a look at ZYNE’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further research:
- Valuation: What is ZYNE 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 ZYNE 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 Zynerba Pharmaceuticals’s board and the CEO’s back ground.
- 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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