Mesoblast Limited (ASX:MSB) Is Expected To Breakeven

Mesoblast Limited’s (ASX:MSB): Mesoblast Limited develops cell-based medicines. With the latest financial year loss of -US$76.8m and a trailing-twelve month of -US$41.6m, the AU$750.5m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on MSB’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for MSB, its year of breakeven and its implied growth rate.

View our latest analysis for Mesoblast

According to the industry analysts covering MSB, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$175.8m in 2021. MSB is therefore projected to breakeven around a couple of months from now! How fast will MSB have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 49.4% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, MSB may become profitable much later than analysts predict.

ASX:MSB Past Future Earnings August 30th 18

I’m not going to go through company-specific developments for MSB given that this is a high-level summary, though, bear in mind 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 I’d like to point out is that MSB has managed its capital judiciously, with debt making up 5.7% of equity. This means that MSB has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of MSB which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at MSB, take a look at MSB’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further research:

1. Valuation: What is MSB 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 MSB 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 Mesoblast’s board and the CEO’s back ground.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.