Zogenix, Inc.’s (NASDAQ:ZGNX): Zogenix, Inc., a pharmaceutical company, develops and commercializes therapies for the treatment of transformative central nervous system disorders in the United States. With the latest financial year loss of -US$123.7m and a trailing-twelve month of -US$385.9m, the US$1.1b market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is ZGNX’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for ZGNX’s growth and when analysts expect the company to become profitable.
According to the 12 industry analysts covering ZGNX, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$104m in 2022. Therefore, ZGNX is expected to breakeven roughly 2 years from now. How fast will ZGNX 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 60% 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.
Given this is a high-level overview, I won’t go into details of ZGNX’s upcoming projects, but, keep in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing I’d like to point out is that ZGNX has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which usually has a high level of debt relative to its equity. This means that ZGNX 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.
There are too many aspects of ZGNX to cover in one brief article, but the key fundamentals for the company can all be found in one place – ZGNX’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further examine:
- Valuation: What is ZGNX 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 ZGNX 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 Zogenix’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.
If you spot an error that warrants correction, please contact the editor at [email protected]. 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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