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With the business potentially at an important milestone, we thought we'd take a closer look at Paratek Pharmaceuticals, Inc.'s (NASDAQ:PRTK) future prospects. Paratek Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company, focuses on the development and commercialization of life-saving therapies for life-threatening diseases or other public health threats for civilian, government, and military use. The US$373m market-cap company announced a latest loss of US$97m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Paratek Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Paratek Pharmaceuticals is bordering on breakeven, according to the 5 American Pharmaceuticals analysts. They expect the company to post a final loss in 2022, before turning a profit of US$73m in 2023. So, the company is predicted to breakeven approximately 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 64%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Paratek Pharmaceuticals' upcoming projects, but, bear in mind that by and large pharmaceuticals, 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.
One thing we would like to bring into light with Paratek Pharmaceuticals is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.
This article is not intended to be a comprehensive analysis on Paratek Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Paratek Pharmaceuticals' company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:
Historical Track Record: What has Paratek Pharmaceuticals' 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 Paratek Pharmaceuticals' 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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