Gamida Cell Ltd (GMDAQ)

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Gamida Cell Ltd.'s (NASDAQ:GMDA) Shift From Loss To Profit

By Simply Wall St
PublishedJune 15, 2022

https://simplywall.st/stocks/us/pharmaceuticals-biotech/nasdaq-gmda/gamida-cell/news/gamida-cell-ltds-nasdaqgmda-shift-from-loss-to-profit?utm_medium=article&utm_source=robinhood

We feel now is a pretty good time to analyse Gamida Cell Ltd.'s (NASDAQ:GMDA) business as it appears the company may be on the cusp of a considerable accomplishment. Gamida Cell Ltd., a clinical-stage biopharmaceutical company, develops cell therapies to cure blood cancers and serious hematologic diseases. With the latest financial year loss of US$90m and a trailing-twelve-month loss of US$91m, the US$110m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Gamida Cell's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Gamida Cell

Consensus from 6 of the American Biotechs analysts is that Gamida Cell is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$8.4m in 2024. The company is therefore projected to breakeven around 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 66% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGM:GMDA Earnings Per Share Growth June 15th 2022
We're not going to go through company-specific developments for Gamida Cell given that this is a high-level summary, however, bear in mind that generally 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.

Before we wrap up, there’s one issue worth mentioning. Gamida Cell currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:
This article is not intended to be a comprehensive analysis on Gamida Cell, so if you are interested in understanding the company at a deeper level, take a look at Gamida Cell's company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

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.