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Aratana Therapeutics, Inc. (NASDAQ:PETX): Are Analysts Optimistic?

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Aratana Therapeutics, Inc.’s (NASDAQ:PETX): Aratana Therapeutics, Inc., a pet therapeutics company, focuses on the licensing, development, and commercialization of therapeutics for dogs and cats in the United States and Belgium. The US$208m market-cap posted a loss in its most recent financial year of -US$47.5m and a latest trailing-twelve-month loss of -US$21.7m shrinking the gap between loss and breakeven. As path to profitability is the topic on PETX’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for PETX, its year of breakeven and its implied growth rate.

View our latest analysis for Aratana Therapeutics

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According to the 4 industry analysts covering PETX, the consensus is breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$20m in 2020. PETX is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which PETX must grow year-on-year. It turns out an average annual growth rate of 54% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:PETX Past and Future Earnings, February 25th 2019
NasdaqGM:PETX Past and Future Earnings, February 25th 2019

Underlying developments driving PETX’s growth isn’t the focus of this broad overview, but, bear in mind that generally pharmaceuticals, 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.

One thing I’d like to point out is that PETX has managed its capital prudently, with debt making up 23% of equity. This means that PETX has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is PETX 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 PETX 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 Aratana Therapeutics’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.