Fortress Biotech, Inc.'s (NASDAQ:FBIO) Shift From Loss To Profit
With the business potentially at an important milestone, we thought we'd take a closer look at Fortress Biotech, Inc.'s (NASDAQ:FBIO) future prospects. Fortress Biotech, Inc., a biopharmaceutical company, develops and commercializes pharmaceutical and biotechnology products. With the latest financial year loss of US$87m and a trailing-twelve-month loss of US$92m, the US$76m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Fortress Biotech's investors mind, we've decided to gauge market sentiment. 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 Fortress Biotech
Consensus from 4 of the American Biotechs analysts is that Fortress Biotech is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$10m in 2025. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 68%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Fortress Biotech's growth isn’t the focus of this broad overview, 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 we would like to bring into light with Fortress Biotech is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of Fortress Biotech to cover in one brief article, but the key fundamentals for the company can all be found in one place – Fortress Biotech's company page on Simply Wall St. We've also put together a list of key factors you should further research:
Historical Track Record: What has Fortress Biotech'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 Fortress Biotech's 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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