Puma Biotechnology, Inc. (NASDAQ:PBYI): When Will It Breakeven?
Puma Biotechnology, Inc.'s (NASDAQ:PBYI): Puma Biotechnology, Inc., a biopharmaceutical company, focuses on the development and commercialization of products to enhance cancer care. The US$283m market-cap company announced a latest loss of -US$75.6m on 31 December 2019 for its most recent financial year result. As path to profitability is the topic on PBYI’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for PBYI’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for Puma Biotechnology
PBYI is bordering on breakeven, according to the 8 Biotechs analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$11m in 2022. So, PBYI is predicted to breakeven approximately 2 years from now. What rate will PBYI 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 62%, which is extremely buoyant. If this rate turns out to be too aggressive, PBYI may become profitable much later than analysts predict.
Underlying developments driving PBYI’s growth isn’t the focus of this broad overview, however, bear in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I would like to bring into light with PBYI is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in PBYI’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of PBYI to cover in one brief article, but the key fundamentals for the company can all be found in one place – PBYI’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:
Valuation: What is PBYI 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 PBYI 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 Puma Biotechnology’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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
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