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With the business potentially at an important milestone, we thought we'd take a closer look at Gamida Cell Ltd.'s (NASDAQ:GMDA) future prospects. Gamida Cell Ltd., a clinical-stage biopharmaceutical company, develops cell therapies to cure blood cancers and serious hematologic diseases. On 31 December 2021, the US$158m market-cap company posted a loss of US$90m for its most recent financial year. Many investors are wondering about the rate at which Gamida Cell will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 6 industry analysts covering Gamida Cell, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$7.0m in 2024. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 53% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Gamida Cell's growth isn’t the focus of this broad overview, but, keep in mind that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we would like to bring into light with Gamida Cell is its debt-to-equity ratio of 163%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of Gamida Cell which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Gamida Cell, take a look at Gamida Cell's company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:
Valuation: What is Gamida Cell 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 Gamida Cell 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 Gamida Cell’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.