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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$251.6m and a trailing-twelve month of US$431.8m, the US$3.2b market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which PTCT will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for PTCT.
According to the 9 industry analysts covering PTCT, the consensus is breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$260m in 2023. PTCT is therefore projected to breakeven around 3 years 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 70% 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, however, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one issue worth mentioning. PTCT currently has a 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 55%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of PTCT 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 PTCT, take a look at PTCT’s company page on Simply Wall St. I’ve also compiled a list of essential 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.
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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