We feel now is a pretty good time to analyse Zai Lab Limited's (NASDAQ:ZLAB) business as it appears the company may be on the cusp of a considerable accomplishment. Zai Lab Limited develops and commercializes therapies to treat oncology, autoimmune disorders, infectious diseases, and neuroscience. With the latest financial year loss of US$335m and a trailing-twelve-month loss of US$271m, the US$2.8b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Zai Lab will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Zai Lab

According to the 14 industry analysts covering Zai Lab, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$70m in 2026. The company is therefore projected to breakeven just over a year from today. 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 62% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Zai Lab given that this is a high-level summary, however, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 17% of equity. This means that it 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:

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

1. Valuation: What is Zai Lab 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 Zai Lab 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 Zai Lab’s board and the CEO’s background.
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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.