Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Flexion Therapeutics, Inc.'s (NASDAQ:FLXN): Flexion Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of anti-inflammatory and analgesic therapies for the treatment of patients with musculoskeletal conditions. The US$436m market-cap posted a loss in its most recent financial year of -US$169.7m and a latest trailing-twelve-month loss of -US$169.6m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which FLXN will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for FLXN’s growth and when analysts expect the company to become profitable.
FLXN is bordering on breakeven, according to the 9 Biotechs analysts. They expect the company to post a final loss in 2021, before turning a profit of US$81m in 2022. Therefore, FLXN is expected to breakeven roughly 3 years from now. How fast will FLXN have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which signals high confidence from analysts. 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 details of FLXN’s upcoming projects, however, 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 I would like to bring into light with FLXN is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and FLXN has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on FLXN, so if you are interested in understanding the company at a deeper level, take a look at FLXN’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- Historical Track Record: What has FLXN'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 Flexion 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.