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We feel now is a pretty good time to analyse Zogenix, Inc.'s (NASDAQ:ZGNX) business as it appears the company may be on the cusp of a considerable accomplishment. Zogenix, Inc., a biopharmaceutical company, develops and commercializes therapies to transform the lives of patients and their families living with rare diseases in the United States. The company’s loss has recently broadened since it announced a US$209m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$245m, moving it further away from breakeven. The most pressing concern for investors is Zogenix's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Zogenix is bordering on breakeven, according to the 12 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$42m in 2023. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% 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.
Given this is a high-level overview, we won’t go into details of Zogenix's upcoming projects, though, bear in mind that typically 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.
One thing we would like to bring into light with Zogenix is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Zogenix's case is 56%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of Zogenix 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 Zogenix, take a look at Zogenix's company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:
Valuation: What is Zogenix 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 Zogenix 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 Zogenix’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.
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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