We feel now is a pretty good time to analyse Open Orphan Plc's (LON:ORPH) business as it appears the company may be on the cusp of a considerable accomplishment. Open Orphan Plc operates as a pharmaceutical service and contract research company. The UK£74m market-cap company announced a latest loss of UK£74k on 31 December 2021 for its most recent financial year result. Many investors are wondering about the rate at which Open Orphan will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Open Orphan is bordering on breakeven, according to the 4 British Life Sciences analysts. They expect the company to post a final loss in 2021, before turning a profit of UK£3.3m in 2022. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 51% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Open Orphan's growth isn’t the focus of this broad overview, however, keep in mind that generally life science companies, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 1.4% 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 Open Orphan, so if you are interested in understanding the company at a deeper level, take a look at Open Orphan's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:
Valuation: What is Open Orphan 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 Open Orphan 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 Open Orphan’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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here