We feel now is a pretty good time to analyse BRAIN Biotech AG’s (ETR:BNN) business as it appears the company may be on the cusp of a considerable accomplishment. BRAIN Biotech AG offers Bio-based products and solutions in Germany, the United States, France, the Netherlands, and the United Kingdom. The €88m market-cap company posted a loss in its most recent financial year of €6.6m and a latest trailing-twelve-month loss of €6.7m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which BRAIN Biotech 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.
Consensus from 4 of the German Chemicals analysts is that BRAIN Biotech is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of €1.4m in 2025. Therefore, the company is expected to breakeven roughly 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 72% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving BRAIN Biotech’s growth isn’t the focus of this broad overview, however, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. BRAIN Biotech currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.