Enzymatica AB's (STO:ENZY): Enzymatica AB, a life science company, develops and sells medical devices for infection-related diseases in Sweden and internationally. On 31 December 2019, the kr783m market-cap posted a loss of -kr41.0m for its most recent financial year. Many investors are wondering the rate at which ENZY will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for ENZY, its year of breakeven and its implied growth rate.
Consensus from the 2 Pharmaceuticals analysts is ENZY is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of kr21m in 2021. So, ENZY is predicted to breakeven approximately a few months from now. How fast will ENZY have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 96% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, ENZY may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for ENZY given that this is a high-level summary, but, keep in mind that by and large 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’d like to point out is that ENZY has managed its capital prudently, with debt making up 5.4% of equity. This means that ENZY has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on ENZY, so if you are interested in understanding the company at a deeper level, take a look at ENZY’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further examine:
- Valuation: What is ENZY 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 ENZY 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 Enzymatica’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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