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With the business potentially at an important milestone, we thought we'd take a closer look at Theratechnologies Inc.'s (TSE:TH) future prospects. Theratechnologies Inc., a biopharmaceutical company, focuses on the development and commercialization of various therapies to address the unmet medical needs in the United States, Canada, and Europe. The CA$77m market-cap company posted a loss in its most recent financial year of US$24m and a latest trailing-twelve-month loss of US$3.2m shrinking the gap between loss and breakeven. As path to profitability is the topic on Theratechnologies' 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.

Check out our latest analysis for Theratechnologies

Theratechnologies is bordering on breakeven, according to the 4 Canadian Biotechs analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$2.1m in 2024. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 58%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Theratechnologies given that this is a high-level summary, but, take into account that generally biotechs, 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.

One thing we would like to bring into light with Theratechnologies is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are too many aspects of Theratechnologies to cover in one brief article, but the key fundamentals for the company can all be found in one place – Theratechnologies' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Valuation: What is Theratechnologies 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 Theratechnologies is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Theratechnologies’s board and the CEO’s background.

3. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.