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With the business potentially at an important milestone, we thought we'd take a closer look at Global Blood Therapeutics, Inc.'s (NASDAQ:GBT) future prospects. Global Blood Therapeutics, Inc., a biopharmaceutical company, engages in the discovery, development, and delivery of treatments for underserved patient communities. The company’s loss has recently broadened since it announced a US$248m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$249m, moving it further away from breakeven. Many investors are wondering about the rate at which Global Blood Therapeutics will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Global Blood Therapeutics is bordering on breakeven, according to the 21 American Biotechs analysts. They expect the company to post a final loss in 2023, before turning a profit of US$189m in 2024. So, the company is predicted to breakeven approximately 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 75% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Global Blood Therapeutics' growth isn’t the focus of this broad overview, however, take into account 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Global Blood Therapeutics currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Global Blood Therapeutics' case is 41%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of Global Blood 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 Global Blood Therapeutics, take a look at Global Blood Therapeutics' company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:
Valuation: What is Global Blood Therapeutics 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 Global Blood Therapeutics 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 Global Blood Therapeutics’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.
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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