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PharmaCielo Ltd. (CVE:PCLO): When Will It Breakeven?

Simply Wall St

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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. With the latest financial year loss of -CA$33.3m and a trailing-twelve month of -CA$30.3m, the CA$534m market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is PCLO’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for PCLO.

See our latest analysis for PharmaCielo

Consensus from the 2 Pharmaceuticals analysts is PCLO is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of CA$32m in 2020. So, PCLO is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which PCLO must grow year-on-year. It turns out an average annual growth rate of 105% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

TSXV:PCLO Past and Future Earnings, July 18th 2019

Given this is a high-level overview, I won’t go into details of PCLO’s upcoming projects, but, bear in mind that by and large pharmaceuticals, 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.

One thing I’d like to point out is that PCLO has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high 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.

Next Steps:

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 compiled a list of pertinent aspects you should look at:

  1. Valuation: What is PCLO 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 PCLO 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 PharmaCielo’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.