With the business potentially at an important milestone, we thought we'd take a closer look at AC Immune SA's (NASDAQ:ACIU) future prospects. AC Immune SA, a clinical stage biopharmaceutical company, discovers, designs, and develops medicines and diagnostic products for the prevention and treatment of neurodegenerative diseases associated with protein misfolding. With the latest financial year loss of CHF54m and a trailing-twelve-month loss of CHF55m, the US$437m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which AC Immune will turn a profit, with the big question being "when will the company breakeven?" Below we will provide a high-level summary of the industry analysts' expectations for the company.
AC Immune is bordering on breakeven, according to the 4 American Biotechs analysts. They expect the company to post a final loss in 2024, before turning a profit of CHF29m in 2025. The company is therefore projected to breakeven just over a year from today. 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 13%, which seems realistic. Should the business grow at a slower rate, it will become profitable at a later date than expected.
NasdaqGM:ACIU Earnings Per Share Growth June 4th 2024
Underlying developments driving AC Immune's growth isn't the focus of this broad overview, however, keep in mind 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, a double-digit growth rate is not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there's one aspect worth mentioning. AC Immune currently has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on AC Immune, so if you are interested in understanding the company at a deeper level, take a look at AC Immune's company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:
Valuation: What is AC Immune 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 AC Immune 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 AC Immune'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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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.