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We feel now is a pretty good time to analyse Ocugen, Inc.'s (NASDAQ:OCGN) business as it appears the company may be on the cusp of a considerable accomplishment. Ocugen, Inc., a clinical-stage biopharmaceutical company, focuses on the developing gene therapies to cure blindness diseases. The US$1.4b market-cap company posted a loss in its most recent financial year of US$34m and a latest trailing-twelve-month loss of US$38m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Ocugen will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 4 of the American Biotechs analysts is that Ocugen is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$118m in 2022. Therefore, the company is expected to breakeven just over a year from today. How fast will the company 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 30% 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 Ocugen given that this is a high-level summary, though, take into account that generally 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.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 4.5% 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.
This article is not intended to be a comprehensive analysis on Ocugen, so if you are interested in understanding the company at a deeper level, take a look at Ocugen's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
Valuation: What is Ocugen 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 Ocugen 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 Ocugen’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.
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.
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