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Seattle Genetics, Inc. (NASDAQ:SGEN): Are Analysts Optimistic?

Simply Wall St

Seattle Genetics, Inc.’s (NASDAQ:SGEN): Seattle Genetics, Inc., a biotechnology company, develops and commercializes therapies for the treatment of cancer in the United States and internationally. On 31 December 2018, the US$12b market-cap posted a loss of -US$222.7m for its most recent financial year. As path to profitability is the topic on SGEN’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SGEN’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Seattle Genetics

SGEN is bordering on breakeven, according to the 13 Biotechs analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$154m in 2021. Therefore, SGEN is expected to breakeven roughly 2 years from now. How fast will SGEN have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 65% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, SGEN may become profitable much later than analysts predict.

NasdaqGS:SGEN Past and Future Earnings, March 5th 2019

Underlying developments driving SGEN’s growth isn’t the focus of this broad overview, though, bear in mind that by and large 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.

Before I wrap up, there’s one aspect worth mentioning. SGEN currently has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. This means that SGEN has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of SGEN to cover in one brief article, but the key fundamentals for the company can all be found in one place – SGEN’s company page on Simply Wall St. I’ve also put together a list of key factors you should further examine:

  1. Valuation: What is SGEN 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 SGEN 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 Seattle Genetics’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.