Ocular Therapeutix Inc (NASDAQ:OCUL): Are Analysts Optimistic?
Ocular Therapeutix Inc’s (NASDAQ:OCUL): Ocular Therapeutix, Inc., a biopharmaceutical company, focuses on the formulation, development, and commercialization of therapies for diseases and conditions of the eye using its bioresorbable hydrogel platform technology. The US$232.62M market-cap company announced a latest loss of -US$63.39M on 31 December 2017 for its most recent financial year result. The most pressing concern for investors is OCUL’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for OCUL, its year of breakeven and its implied growth rate.
View our latest analysis for Ocular Therapeutix
According to the industry analysts covering OCUL, breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$94.50M in 2020. OCUL is therefore projected to breakeven around 2 years from now. How fast will OCUL have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 52.94% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, OCUL may become profitable much later than analysts predict.
Underlying developments driving OCUL’s growth isn’t the focus of this broad overview, however, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. 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 issue worth mentioning. OCUL currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in OCUL’s case is 68.90%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of OCUL to cover in one brief article, but the key fundamentals for the company can all be found in one place – OCUL’s company page on Simply Wall St. I’ve also compiled a list of key factors you should look at:
Valuation: What is OCUL 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 OCUL 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 Ocular Therapeutix’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.
