We Might See A Profit From SCYNEXIS, Inc. (NASDAQ:SCYX) Soon
SCYNEXIS, Inc. (NASDAQ:SCYX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. SCYNEXIS, Inc., a biotechnology company, develops products for the treatment of fungal infections in the United States. The US$110m market-cap company announced a latest loss of US$63m on 31 December 2022 for its most recent financial year result. As path to profitability is the topic on SCYNEXIS' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for SCYNEXIS
Consensus from 6 of the American Pharmaceuticals analysts is that SCYNEXIS is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$47m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 29% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for SCYNEXIS given that this is a high-level summary, though, bear in mind that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business 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 issue worth mentioning. SCYNEXIS currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on SCYNEXIS, so if you are interested in understanding the company at a deeper level, take a look at SCYNEXIS' company page on Simply Wall St. We've also put together a list of important factors you should further research:
Valuation: What is SCYNEXIS 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 SCYNEXIS 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 SCYNEXIS’s board and the CEO’s background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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