With the business potentially at an important milestone, we thought we'd take a closer look at Clarity Pharmaceuticals Ltd's (ASX:CU6) future prospects. Clarity Pharmaceuticals Ltd, a clinical stage radiopharmaceutical company, develops theranostic therapy and imaging products for the treatment of cancer in children and adults. On 30 June 2022, the AU$213m market-cap company posted a loss of AU$24m for its most recent financial year. As path to profitability is the topic on Clarity Pharmaceuticals' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Clarity Pharmaceuticals
Consensus from 3 of the Australian Pharmaceuticals analysts is that Clarity Pharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$80m in 2025. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 82% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Clarity Pharmaceuticals' growth isn’t the focus of this broad overview, but, take into account that by and large 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 Clarity Pharmaceuticals has no debt on its balance sheet, which is rare for a loss-making pharma, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of Clarity Pharmaceuticals 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 Clarity Pharmaceuticals, take a look at Clarity Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
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Valuation: What is Clarity Pharmaceuticals 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 Clarity Pharmaceuticals is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Clarity Pharmaceuticals’s board and the CEO’s background.
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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.