Fate Therapeutics Inc’s (NASDAQ:FATE) Shift From Loss To Profit
Fate Therapeutics Inc’s (NASDAQ:FATE): Fate Therapeutics, Inc., a clinical-stage biopharmaceutical company, develops programmed cellular immunotherapies for cancer and immune disorders worldwide. The US$489.72M market-cap company announced a latest loss of -US$42.95M on 31 December 2017 for its most recent financial year result. The most pressing concern for investors is FATE’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for FATE, its year of breakeven and its implied growth rate.
View our latest analysis for Fate Therapeutics
FATE is bordering on breakeven, according to analysts. They expect the company to post a final loss in 2021, before turning a profit of US$58.20M in 2022. FATE is therefore projected to breakeven around 4 years from now. What rate will FATE 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 17.22%, which seems realistic. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into detail the detail of FATE’s upcoming projects, but, keep in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means a double-digit 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. FATE has managed its capital prudently, with debt making up 19.18% of equity. This means that FATE 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 FATE, so if you are interested in understanding the company at a deeper level, take a look at FATE’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:
Historical Track Record: What has FATE’s 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 Fate Therapeutics’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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
