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Rexahn Pharmaceuticals, Inc.'s (NYSEMKT:RNN) Profit Outlook

Simply Wall St

Rexahn Pharmaceuticals, Inc.'s (NYSEMKT:RNN): Rexahn Pharmaceuticals, Inc., a clinical stage biopharmaceutical company, develops therapies for the treatment of cancer. The company’s loss has recently broadened since it announced a -US$14.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$14.6m, moving it further away from breakeven. The most pressing concern for investors is RNN’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for RNN, its year of breakeven and its implied growth rate.

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See our latest analysis for Rexahn Pharmaceuticals

According to the 2 industry analysts covering RNN, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$105m in 2022. So, RNN is predicted to breakeven approximately 3 years from today. What rate will RNN 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 rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

AMEX:RNN Past and Future Earnings, May 21st 2019

I’m not going to go through company-specific developments for RNN given that this is a high-level summary, however, keep in mind 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’d like to point out is that RNN has managed its capital prudently, with debt making up 1.9% of equity. This means that RNN has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of RNN 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 RNN, take a look at RNN’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should look at:

  1. Valuation: What is RNN 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 RNN is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rexahn Pharmaceuticals’s board and the CEO’s back ground.
  3. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.