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Pluristem Therapeutics Inc.'s (NASDAQ:PSTI): Pluristem Therapeutics Inc., together with its subsidiary, Pluristem Ltd., operates as a bio-therapeutics company in Israel. The company’s loss has recently broadened since it announced a -US$26.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$36.5m, moving it further away from breakeven. As path to profitability is the topic on PSTI’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for PSTI’s growth and when analysts expect the company to become profitable.
PSTI is bordering on breakeven, according to the 2 Biotechs analysts. They expect the company to post a final loss in 2021, before turning a profit of US$40m in 2022. Therefore, PSTI is expected to breakeven roughly 3 years from today. What rate will PSTI 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 79%, which is extremely buoyant. 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 details of PSTI’s upcoming projects, but, bear in mind that generally biotechs, 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.
Before I wrap up, there’s one aspect worth mentioning. PSTI currently has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that PSTI has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are key fundamentals of PSTI which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at PSTI, take a look at PSTI’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:
- Historical Track Record: What has PSTI'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 Pluristem 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.