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Shield Therapeutics plc (LON:STX) Is Expected To Breakeven In The Near Future

With the business potentially at an important milestone, we thought we'd take a closer look at Shield Therapeutics plc's (LON:STX) future prospects. Shield Therapeutics plc, a specialty pharmaceutical company, focuses on commercialization of pharmaceuticals to treat unmet medical needs. With the latest financial year loss of US$49m and a trailing-twelve-month loss of US$49m, the UK£52m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Shield Therapeutics' 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 Shield Therapeutics

Consensus from 4 of the British Pharmaceuticals analysts is that Shield Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$22m 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 83% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
AIM:STX Earnings Per Share Growth December 28th 2023

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 typically 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.

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One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 21% of equity. This means that it 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 key fundamentals of Shield Therapeutics 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 Shield Therapeutics, take a look at Shield Therapeutics' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

  1. 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.

  2. 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.

  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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.