Sarepta Therapeutics, Inc.'s (NASDAQ:SRPT): Sarepta Therapeutics, Inc. focuses on the discovery and development of RNA-based therapeutics, gene therapy, and other genetic medicine approaches for the treatment of rare diseases. The US$8.4b market-cap posted a loss in its most recent financial year of -US$361.9m and a latest trailing-twelve-month loss of -US$620.3m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is SRPTs path to profitability when will it breakeven? Ive put together a brief outline of industry analyst expectations for SRPT, its year of breakeven and its implied growth rate.
See our latest analysis for Sarepta Therapeutics
According to the 22 industry analysts covering SRPT, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$676m in 2022. SRPT is therefore projected to breakeven around 3 years from now. What rate will SRPT have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 68%, which is rather optimistic! If this rate turns out to be too aggressive, SRPT may become profitable much later than analysts predict.
NasdaqGS:SRPT Past and Future Earnings, December 3rd 2019
Im not going to go through company-specific developments for SRPT given that this is a high-level summary, though, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I would like to bring into light with SRPT is its relatively high level of debt. Typically, debt shouldnt exceed 40% of your equity, which in SRPTs case is 44%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on SRPT, so if you are interested in understanding the company at a deeper level, take a look at SRPTs company page on Simply Wall St. Ive also put together a list of relevant aspects you should look at:
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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Breakeven On The Horizon For Sarepta Therapeutics, Inc. (NASDAQ:SRPT) - Yahoo Finance
Recommendation and review posted by G. Smith
