Yahoo Finance Shield Therapeutics plc's (LON:STX) Profit Outlook
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. With the latest financial year loss of UK£19m and a trailing-twelve-month loss of UK£24m, the UK£24m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Shield Therapeutics' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Shield Therapeutics
According to the 4 industry analysts covering Shield Therapeutics, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of UK£13m in 2024. The company is therefore projected to breakeven around 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 91%, which signals high confidence from analysts. 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that Shield Therapeutics has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect 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 essential factors you should further examine:
Historical Track Record: What has Shield Therapeutics' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Shield Therapeutics' 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.
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.
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