Kala Pharmaceuticals, Inc. (NASDAQ:KALA) Is Expected To Breakeven
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Kala Pharmaceuticals, Inc.'s (NASDAQ:KALA): Kala Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the development and commercialization of therapies using its proprietary nanoparticle-based Mucus Penetrating Particles (MPP) technology for the treatment of eye diseases. With the latest financial year loss of -US$66.7m and a trailing-twelve month of -US$80.8m, the US$167m market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which KALA will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for KALA.
See our latest analysis for Kala Pharmaceuticals
Consensus from the 7 Pharmaceuticals analysts is KALA is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$91m in 2022. KALA is therefore projected to breakeven around 3 years from now. What rate will KALA 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 77%, which is extremely buoyant. If this rate turns out to be too aggressive, KALA may become profitable much later than analysts predict.
Underlying developments driving KALA’s growth isn’t the focus of this broad overview, though, bear in mind that generally pharmaceuticals, 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 would like to bring into light with KALA is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in KALA’s case is 86%. 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 KALA to cover in one brief article, but the key fundamentals for the company can all be found in one place – KALA’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:
Valuation: What is KALA 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 KALA 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 Kala Pharmaceuticals’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 editorial-team@simplywallst.com. 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.