We feel now is a pretty good time to analyse Puma Biotechnology, Inc.’s (NASDAQ:PBYI) business as it appears the company may be on the cusp of a considerable accomplishment. Puma Biotechnology, Inc., a biopharmaceutical company, focuses on the development and commercialization of products to enhance cancer care in the United States and internationally. The US$376m market-cap company announced a latest loss of US$60m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Puma Biotechnology’s path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.
Puma Biotechnology is bordering on breakeven, according to the 8 American Biotechs analysts. They expect the company to post a final loss in 2021, before turning a profit of US$390k in 2022. The company is therefore projected to breakeven just over a year 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 72%, which is rather optimistic! 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 Puma Biotechnology given that this is a high-level summary, though, take into account 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 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 issue worth mentioning. Puma Biotechnology currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.
This article is not intended to be a comprehensive analysis on Puma Biotechnology, so if you are interested in understanding the company at a deeper level, take a look at Puma Biotechnology’s company page on Simply Wall St. We’ve also put together a list of key aspects you should further examine:
Valuation: What is Puma Biotechnology 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 Puma Biotechnology 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 Puma Biotechnology’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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