Breakeven On The Horizon For Faron Pharmaceuticals Oy (LON:FARN)

Faron Pharmaceuticals Oy (LON:FARN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Faron Pharmaceuticals Oy operates as a clinical stage drug discovery and development company. The UK£219m market-cap company posted a loss in its most recent financial year of €29m and a latest trailing-twelve-month loss of €29m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Faron Pharmaceuticals Oy'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.

Check out our latest analysis for Faron Pharmaceuticals Oy

Faron Pharmaceuticals Oy is bordering on breakeven, according to the 4 British Biotechs analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of €57m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 70% 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.

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Underlying developments driving Faron Pharmaceuticals Oy's growth isn’t the focus of this broad overview, but, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Faron Pharmaceuticals Oy currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are key fundamentals of Faron Pharmaceuticals Oy 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 Faron Pharmaceuticals Oy, take a look at Faron Pharmaceuticals Oy's company page on Simply Wall St. We've also compiled a list of important factors you should further research:

1. Valuation: What is Faron Pharmaceuticals Oy 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 Faron Pharmaceuticals Oy 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 Faron Pharmaceuticals Oy’s board and the CEO’s background.

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.

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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.