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Market Sentiment Around Loss-Making FibroGen, Inc. (NASDAQ:FGEN)

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Simply Wall St
·3 min read
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We feel now is a pretty good time to analyse FibroGen, Inc.'s (NASDAQ:FGEN) business as it appears the company may be on the cusp of a considerable accomplishment. FibroGen, Inc., a biopharmaceutical company, discovers, develops, and commercializes therapeutics to treat serious unmet medical needs. The company’s loss has recently broadened since it announced a US$77.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$311.2m, moving it further away from breakeven. The most pressing concern for investors is FibroGen's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for FibroGen

Consensus from 8 of the American Biotechs analysts is that FibroGen is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$123m in 2023. Therefore, the company is expected to breakeven roughly 3 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 74%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

Given this is a high-level overview, we won’t go into details of FibroGen's upcoming projects, though, take into account that by and large 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 4.1% 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.

Next Steps:

There are too many aspects of FibroGen to cover in one brief article, but the key fundamentals for the company can all be found in one place – FibroGen's company page on Simply Wall St. We've also put together a list of key aspects you should further research:

  1. Valuation: What is FibroGen 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 FibroGen 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 FibroGen’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@simplywallst.com.