When Will Aytu BioPharma, Inc. (NASDAQ:AYTU) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at Aytu BioPharma, Inc.'s (NASDAQ:AYTU) future prospects. Aytu Biopharma, Inc., a commercial-stage pharmaceutical company, focuses on commercializing novel therapeutics and consumer healthcare products the United States and internationally. The US$14m market-cap company posted a loss in its most recent financial year of US$17m and a latest trailing-twelve-month loss of US$24m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Aytu BioPharma's 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 Aytu BioPharma

Aytu BioPharma is bordering on breakeven, according to some American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$3.4m in 2025. Therefore, the company is expected to breakeven just over a year from now. 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 96%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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Given this is a high-level overview, we won’t go into details of Aytu BioPharma's upcoming projects, however, keep in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one issue worth mentioning. Aytu BioPharma currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Aytu BioPharma's case is 50%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Aytu BioPharma 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 Aytu BioPharma 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 Aytu BioPharma’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.

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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.