Zynerba Pharmaceuticals, Inc.’s (NASDAQ:ZYNE): Zynerba Pharmaceuticals, Inc. operates as a clinical stage specialty pharmaceutical company. The company’s loss has recently broadened since it announced a -US$32.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$40.2m, moving it further away from breakeven. Many investors are wondering the rate at which ZYNE will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for ZYNE’s growth and when analysts expect the company to become profitable.
According to the 5 industry analysts covering ZYNE, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$17m in 2021. ZYNE is therefore projected to breakeven around 3 years from today. How fast will ZYNE 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 64% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for ZYNE given that this is a high-level summary, but, take into account that generally 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.
Before I wrap up, there’s one aspect worth mentioning. ZYNE currently has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which typically has high debt relative to its equity. This means that ZYNE 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.
There are key fundamentals of ZYNE 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 ZYNE, take a look at ZYNE’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should look at:
- Historical Track Record: What has ZYNE’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Zynerba Pharmaceuticals’s board and the CEO’s back ground.
- 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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