Evoke Pharma, Inc. (NASDAQ:EVOK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Evoke Pharma, Inc., a specialty pharmaceutical company, primarily focuses on the development and commercialization of drugs for the treatment of gastroenterological disorders and diseases. On 31 December 2020, the US$39m market-cap company posted a loss of US$13m for its most recent financial year. The most pressing concern for investors is Evoke Pharma’s path to profitability – when will it 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. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 72% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
NasdaqCM:EVOK Earnings Per Share Growth April 16th 2021
Given this is a high-level overview, we won’t go into details of Evoke Pharma’s upcoming projects, but, take into account 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.
Before we wrap up, there’s one issue worth mentioning. Evoke Pharma 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. Oftentimes, losses exist only on paper but other times, it can be a red flag.
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 examine:
- 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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