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SCYNEXIS, Inc.'s (NASDAQ:SCYX) Shift From Loss To Profit

·3 min read

SCYNEXIS, Inc.'s (NASDAQ:SCYX): SCYNEXIS, Inc., a biotechnology company, delivers therapies for the treatment fungal infections in the United States. The US$68m market-cap posted a loss in its most recent financial year of US$53.7m and a latest trailing-twelve-month loss of US$37.8m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which SCYX will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for SCYX, its year of breakeven and its implied growth rate.

View our latest analysis for SCYNEXIS

Consensus from the 5 Pharmaceuticals analysts is SCYX is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$102m in 2023. Therefore, SCYX is expected to breakeven roughly 3 years from now. What rate will SCYX 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 73%, which signals high confidence from analysts. If this rate turns out to be too aggressive, SCYX may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

I’m not going to go through company-specific developments for SCYX given that this is a high-level summary, however, keep in mind that by and large pharmaceuticals, 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.

Before I wrap up, there’s one issue worth mentioning. SCYX currently has a debt-to-equity ratio of 133%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in SCYX’s case, it has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is SCYX 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 SCYX 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 SCYNEXIS’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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.