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With the business potentially at an important milestone, we thought we'd take a closer look at Heron Therapeutics, Inc.'s (NASDAQ:HRTX) future prospects. Heron Therapeutics, Inc., a biotechnology company, engages in developing treatments to address unmet medical needs. The US$1.6b market-cap company announced a latest loss of US$227m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Heron Therapeutics will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 8 of the American Biotechs analysts is that Heron Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$32m in 2023. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 64% is expected, 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, we won’t go into details of Heron Therapeutics' upcoming projects, but, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 3.0% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of Heron Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Heron Therapeutics' company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:
Valuation: What is Heron 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 Heron 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 Heron 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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