Nektar Therapeutics’s (NASDAQ:NKTR) Shift From Loss To Profit
Nektar Therapeutics’s (NASDAQ:NKTR): Nektar Therapeutics develops drug candidates based on its PEGylation and polymer conjugate technology platforms in the United States. The US$14.52B market-cap company’s loss lessens since it announced a -US$153.52M bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$105.06M, as it approaches breakeven. Many investors are wondering the rate at which NKTR will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for NKTR’s growth and when analysts expect the company to become profitable.
View our latest analysis for Nektar Therapeutics
According to the industry analysts covering NKTR, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$200.00M in 2022. So, NKTR is predicted to breakeven approximately 4 years from now. What rate will NKTR have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 17.10%, which seems relatively fair. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into detail the detail of NKTR’s upcoming projects, but, 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, a double-digit growth rate is not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one issue worth mentioning. NKTR currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and NKTR has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of NKTR to cover in one brief article, but the key fundamentals for the company can all be found in one place – NKTR’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should further examine:
Historical Track Record: What has NKTR’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Nektar Therapeutics’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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
