Sareum Holdings plc (LON:SAR): Are Analysts Optimistic?
Sareum Holdings plc (LON:SAR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Sareum Holdings plc, a clinical stage small molecule drug development company, engages in the discovery and development of therapeutic drugs for cancer and autoimmune diseases. On 30 June 2023, the UK£23m market-cap company posted a loss of UK£3.2m for its most recent financial year. As path to profitability is the topic on Sareum Holdings' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Sareum Holdings
Consensus from 2 of the British Pharmaceuticals analysts is that Sareum Holdings is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of UK£27m in 2026. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 90%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Sareum Holdings given that this is a high-level summary, but, keep in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. Sareum Holdings currently has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of Sareum Holdings which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Sareum Holdings, take a look at Sareum Holdings' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:
Valuation: What is Sareum Holdings 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 Sareum Holdings 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 Sareum Holdings’s board and the CEO’s background.
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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
