PharmaCielo Ltd.'s (CVE:PCLO): PharmaCielo Ltd., through its subsidiary, PharmaCielo Colombia Holdings S.A.S., cultivates, processes, produces, and supplies medicinal-grade cannabis oil extracts and related products in Colombia and internationally. The CA$72m market-cap company’s loss lessens since it announced a -CA$33.3m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -CA$31.2m, as it approaches breakeven. Many investors are wondering the rate at which PCLO will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for PCLO.
Consensus from the 2 Pharmaceuticals analysts is PCLO is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$72m in 2021. Therefore, PCLO is expected to breakeven roughly a few months from now. What rate will PCLO have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 126%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for PCLO given that this is a high-level summary, but, keep in mind that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business 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 aspect worth mentioning. PCLO currently has no debt on its balance sheet, which is rare for a loss-making pharma, which usually has a high level of debt relative to its equity. PCLO currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are key fundamentals of PCLO which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at PCLO, take a look at PCLO’s company page on Simply Wall St. I’ve also put together a list of key aspects you should look at:
- Historical Track Record: What has PCLO'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 PharmaCielo’s board and the CEO’s back ground.
- 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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