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Global Blood Therapeutics, Inc.'s (NASDAQ:GBT): Global Blood Therapeutics, Inc., a clinical-stage biopharmaceutical company, engages in the discovery, development, and delivery of treatments for underserved patient communities. The US$3.1b market-cap company announced a latest loss of -US$174.2m on 31 December 2018 for its most recent financial year result. Many investors are wondering the rate at which GBT will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for GBT’s growth and when analysts expect the company to become profitable.
GBT is bordering on breakeven, according to the 13 Biotechs analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$23m in 2021. So, GBT is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, I calculated the rate at which GBT must grow year-on-year. It turns out an average annual growth rate of 58% is expected, which is rather optimistic! If this rate turns out to be too aggressive, GBT may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of GBT’s upcoming projects, but, bear in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that GBT has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which usually has a high level of debt relative to its equity. This means that GBT has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of GBT to cover in one brief article, but the key fundamentals for the company can all be found in one place – GBT’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- Valuation: What is GBT 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 GBT 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 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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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.