Shield Therapeutics plc (LON:STX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Shield Therapeutics plc, a specialty pharmaceutical company, engages in the development and commercialization of clinical stage pharmaceuticals to treat unmet medical needs. The UK£33m market-cap company posted a loss in its most recent financial year of UK£19m and a latest trailing-twelve-month loss of UK£24m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Shield Therapeutics will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Consensus from 4 of the British Pharmaceuticals analysts is that Shield Therapeutics is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of UK£4.0m in 2024. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 79% 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.
We're not going to go through company-specific developments for Shield Therapeutics given that this is a high-level summary, though, take into account that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. Shield Therapeutics currently has no debt on its balance sheet, which is rare for a loss-making pharma, 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.
There are too many aspects of Shield Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Shield Therapeutics' company page on Simply Wall St. We've also compiled a list of important factors you should further research:
Valuation: What is Shield Therapeutics 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 Shield Therapeutics 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 Shield Therapeutics’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.
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