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We feel now is a pretty good time to analyse scPharmaceuticals Inc.'s (NASDAQ:SCPH) business as it appears the company may be on the cusp of a considerable accomplishment. scPharmaceuticals Inc., a pharmaceutical company, engages in the development and commercialization of various pharmaceutical products. The company’s loss has recently broadened since it announced a US$55m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$58m, moving it further away from breakeven. The most pressing concern for investors is scPharmaceuticals' 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.
View our latest analysis for scPharmaceuticals
According to the 6 industry analysts covering scPharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$36m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of scPharmaceuticals' upcoming projects, but, bear in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. scPharmaceuticals currently has a debt-to-equity ratio of 160%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of scPharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – scPharmaceuticals' company page on Simply Wall St. We've also compiled a list of key aspects you should further research:
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Valuation: What is scPharmaceuticals 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 scPharmaceuticals 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 scPharmaceuticals’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.