Sarepta Therapeutics, Inc.'s (NASDAQ:SRPT): Sarepta Therapeutics, Inc., a commercial-stage biopharmaceutical company, focuses on the discovery and development of RNA-targeted therapeutics, gene therapy, and other genetic therapeutic modalities approaches for the treatment of rare diseases. The US$10b market-cap company’s loss lessens since it announced a -US$715.1m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$655.9m, as it approaches breakeven. The most pressing concern for investors is SRPT’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for SRPT’s growth and when analysts expect the company to become profitable.

See our latest analysis for Sarepta Therapeutics

SRPT is bordering on breakeven, according to the 21 Biotechs analysts. They expect the company to post a final loss in 2021, before turning a profit of US$738m in 2022. SRPT is therefore projected to breakeven around 2 years from today. How fast will SRPT have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving SRPT’s growth isn’t the focus of this broad overview, but, keep in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before I wrap up, there’s one issue worth mentioning. SRPT currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SRPT’s case is 60%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on SRPT, so if you are interested in understanding the company at a deeper level, take a look at SRPT’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further examine:

1. Valuation: What is SRPT 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 SRPT 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 Sarepta Therapeutics’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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.