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Evolus, Inc.'s (NASDAQ:EOLS): Evolus, Inc., a performance beauty company, provides medical aesthetic products for physicians and their patients in the United States. The US$445m market-cap posted a loss in its most recent financial year of -US$46.9m and a latest trailing-twelve-month loss of -US$72.8m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is EOLS’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for EOLS.
See our latest analysis for Evolus
Consensus from the 7 Pharmaceuticals analysts is EOLS is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$40m in 2022. EOLS is therefore projected to breakeven around 3 years from now. What rate will EOLS 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 67%, which signals high confidence from analysts. If this rate turns out to be too aggressive, EOLS may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for EOLS given that this is a high-level summary, but, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. EOLS currently has a debt-to-equity ratio of 177%. Typically, debt shouldn’t exceed 40% of your equity, and EOLS has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of EOLS to cover in one brief article, but the key fundamentals for the company can all be found in one place – EOLS’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further examine:
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Valuation: What is EOLS 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 EOLS 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 Evolus’s board and the CEO’s back ground.
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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.
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.
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. Thank you for reading.