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Loss-Making PTC Therapeutics, Inc. (NASDAQ:PTCT) Expected To Breakeven In The Medium-Term

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We feel now is a pretty good time to analyse PTC Therapeutics, Inc.'s (NASDAQ:PTCT) business as it appears the company may be on the cusp of a considerable accomplishment. PTC Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of medicines for the treatment of rare disorders. The company’s loss has recently broadened since it announced a US$252m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$441m, moving it further away from breakeven. Many investors are wondering about the rate at which 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.

Check out our latest analysis for Therapeutics

Therapeutics is bordering on breakeven, according to the 11 American Biotechs analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$142m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 56%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Therapeutics' growth isn’t the focus of this broad overview, though, keep in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. 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 issue worth mentioning. Therapeutics currently has a debt-to-equity ratio of 189%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Therapeutics' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

  1. Valuation: What is 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 Therapeutics is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Therapeutics’s board and the CEO’s background.

  3. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.