Yahoo Finance Alector, Inc. (NASDAQ:ALEC) Has Found A Path To Profitability
With the business potentially at an important milestone, we thought we'd take a closer look at Alector, Inc.'s (NASDAQ:ALEC) future prospects. Alector, Inc., a clinical stage biopharmaceutical company, develops therapies for the treatment of neurodegeneration diseases. The US$1.7b market-cap company’s loss lessened since it announced a US$190m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$33m, as it approaches breakeven. Many investors are wondering about the rate at which Alector will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Alector
Consensus from 8 of the American Biotechs analysts is that Alector is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$110m in 2022. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of -53%,
Given this is a high-level overview, we won’t go into details of Alector's upcoming projects, but, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that Alector has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
This article is not intended to be a comprehensive analysis on Alector, so if you are interested in understanding the company at a deeper level, take a look at Alector's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:
Historical Track Record: What has Alector'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 Alector'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.
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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.
