Eton Pharmaceuticals, Inc. (NASDAQ:ETON): Is Breakeven Near?
Eton Pharmaceuticals, Inc.'s (NASDAQ:ETON): Eton Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on developing and commercializing pharmaceutical products. The US$116m market-cap posted a loss in its most recent financial year of -US$37.2m and a latest trailing-twelve-month loss of -US$41.7m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is ETON’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for ETON.
Check out our latest analysis for Eton Pharmaceuticals
According to the 3 industry analysts covering ETON, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$7.7m in 2022. Therefore, ETON is expected to breakeven roughly 2 years from today. How fast will ETON have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% 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.
Underlying developments driving ETON’s growth isn’t the focus of this broad overview, however, keep in mind that by and large 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.
Before I wrap up, there’s one aspect worth mentioning. ETON currently has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high debt relative to its equity. This means that ETON 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 key fundamentals of ETON 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 ETON, take a look at ETON’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:
Valuation: What is ETON 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 ETON 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 Eton 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.
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.
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