PTC Therapeutics Inc’s (NASDAQ:PTCT): PTC Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of medicines for the treatment of rare disorders. With the latest financial year loss of -US$79.00M and a trailing-twelve month of -US$69.21M, the US$1.74B market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on PTCT’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for PTCT, its year of breakeven and its implied growth rate.
PTCT is bordering on breakeven, according to analysts. They anticipate the company to incur a final loss in 2018, before generating positive profits of US$6.14M in 2019. Therefore, PTCT is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which PTCT must grow year-on-year. It turns out an average annual growth rate of 68.84% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for PTCT given that this is a high-level summary, though, take into account that by and large biotechs, 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 I would like to bring into light with PTCT is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in PTCT’s case is 97.72%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on PTCT, so if you are interested in understanding the company at a deeper level, take a look at PTCT’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:
- Valuation: What is PTCT 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 PTCT 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 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.
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.