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, engages in the development and commercialization of late-stage pharmaceuticals to treat unmet medical needs. The UK£32m market-cap company posted a loss in its most recent financial year of UK£2.6m and a latest trailing-twelve-month loss of UK£13m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Shield Therapeutics' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
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£33m in 2024. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 68% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Shield Therapeutics given that this is a high-level summary, but, keep in mind that generally pharmaceuticals, 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 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 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 important factors you should further examine:
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.