Immutep Limited's (ASX:IMM): Immutep Limited, a biotechnology company, engages in the research, development, and commercialization of biological products. The AU$97m market-cap company announced a latest loss of -AU$18.3m on 30 June 2019 for its most recent financial year result. The most pressing concern for investors is IMM’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for IMM’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering IMM, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$2.0m in 2022. Therefore, IMM is expected to breakeven roughly 3 years from today. What rate will IMM have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 57%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving IMM’s growth isn’t the focus of this broad overview, but, keep 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 I wrap up, there’s one aspect worth mentioning. IMM has managed its capital prudently, with debt making up 31% of equity. This means that IMM 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 key fundamentals of IMM which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at IMM, take a look at IMM’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:
- Historical Track Record: What has IMM'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 Immutep’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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