When Will scPharmaceuticals Inc. (NASDAQ:SCPH) Turn A Profit?
scPharmaceuticals Inc. (NASDAQ:SCPH) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. scPharmaceuticals Inc., a pharmaceutical company, engages in the development and commercialization of various pharmaceutical products. The US$310m market-cap company announced a latest loss of US$37m on 31 December 2022 for its most recent financial year result. Many investors are wondering about the rate at which scPharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for scPharmaceuticals
According to the 5 industry analysts covering scPharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$27m in 2025. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 57% year-on-year, on average, which is rather optimistic! 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 scPharmaceuticals given that this is a high-level summary, however, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we would like to bring into light with scPharmaceuticals is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in scPharmaceuticals' case is 51%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of scPharmaceuticals 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 scPharmaceuticals, take a look at scPharmaceuticals' company page on Simply Wall St. We've also put together a list of key aspects you should further examine:
Valuation: What is scPharmaceuticals 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 scPharmaceuticals 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 scPharmaceuticals’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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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