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Market Sentiment Around Loss-Making Acasti Pharma Inc. (CVE:ACST)

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·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Acasti Pharma Inc.'s (CVE:ACST) future prospects. Acasti Pharma Inc., a biopharmaceutical company, engages in the development and commercialization of pharmaceutical products for cardiovascular diseases. The CA$64m market-cap company posted a loss in its most recent financial year of US$20m and a latest trailing-twelve-month loss of US$11m shrinking the gap between loss and breakeven. As path to profitability is the topic on Acasti Pharma's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Acasti Pharma

Consensus from 2 of the Canadian Pharmaceuticals analysts is that Acasti Pharma is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$161m in 2024. So, the company is predicted to breakeven approximately 3 years 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 123% 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.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Acasti Pharma's upcoming projects, but, bear 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Acasti Pharma 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. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Acasti Pharma 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 Acasti Pharma 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 Acasti Pharma’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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