Savara Inc.'s (NASDAQ:SVRA): Savara Inc. operates as an orphan lung disease company. The US$427m market-cap posted a loss in its most recent financial year of -US$61.5m and a latest trailing-twelve-month loss of -US$46.8m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which SVRA will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for SVRA, its year of breakeven and its implied growth rate.
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According to the 6 industry analysts covering SVRA, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$59m in 2022. Therefore, SVRA is expected to breakeven roughly 3 years from now. How fast will SVRA have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 77% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, SVRA may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of SVRA’s upcoming projects, but, keep in mind that typically 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’d like to point out is that SVRA has managed its capital judiciously, with debt making up 25% of equity. This means that SVRA has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of SVRA to cover in one brief article, but the key fundamentals for the company can all be found in one place – SVRA’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:
- Valuation: What is SVRA 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 SVRA 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 Savara’s board and the CEO’s back ground.
- 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.