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We feel now is a pretty good time to analyse Evoke Pharma, Inc.'s (NASDAQ:EVOK) business as it appears the company may be on the cusp of a considerable accomplishment. Evoke Pharma, Inc., a specialty pharmaceutical company, primarily focuses on the development of drugs for the treatment of gastroenterological disorders and diseases. The US$79m market-cap company announced a latest loss of US$13m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Evoke Pharma will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Evoke Pharma is bordering on breakeven, according to some American Pharmaceuticals analysts. They expect the company to post a final loss in 2022, before turning a profit of US$10m in 2023. So, the company is predicted to breakeven approximately 2 years 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 81%, which is rather optimistic! 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 Evoke Pharma's upcoming projects, however, keep in mind that typically 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.
One thing we would like to bring into light with Evoke Pharma is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.
There are too many aspects of Evoke Pharma to cover in one brief article, but the key fundamentals for the company can all be found in one place – Evoke Pharma's company page on Simply Wall St. We've also put together a list of key aspects you should further research:
Historical Track Record: What has Evoke Pharma's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Evoke Pharma'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.
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. 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.
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