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MorphoSys AG's (ETR:MOR) Path To Profitability

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  • MOR
  • MOR.DE

MorphoSys AG's (ETR:MOR): MorphoSys AG, together with its subsidiaries, develops and commercializes antibodies and peptides for therapeutic applications in the United States. The company’s loss has recently broadened since it announced a -€56.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of -€96.0m, moving it further away from breakeven. Many investors are wondering the rate at which MOR 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 MOR.

See our latest analysis for MorphoSys

Consensus from the 14 Biotechs analysts is MOR is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of €43m in 2022. So, MOR is predicted to breakeven approximately 2 years from today. How fast will MOR have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 50% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

XTRA:MOR Past and Future Earnings, January 14th 2020
XTRA:MOR Past and Future Earnings, January 14th 2020

I’m not going to go through company-specific developments for MOR given that this is a high-level summary, though, keep in mind that typically biotechs, 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.

Before I wrap up, there’s one aspect worth mentioning. MOR has managed its capital prudently, with debt making up 0.006% of equity. This means that MOR 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:

This article is not intended to be a comprehensive analysis on MOR, so if you are interested in understanding the company at a deeper level, take a look at MOR’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should look at:

  1. Valuation: What is MOR 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 MOR 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 MorphoSys’s board and the CEO’s back ground.

  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.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.