Breakeven On The Horizon For GW Pharmaceuticals plc (NASDAQ:GWPH)

Simply Wall St - finance.yahoo.com Posted 5 years ago
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GW Pharmaceuticals plc’s (NASDAQ:GWPH): GW Pharmaceuticals plc, a biopharmaceutical company, focuses on discovering, developing, and commercializing cannabinoid prescription medicines using botanical extracts derived from the Cannabis plant. The US$5.4b market-cap posted a loss in its most recent financial year of -US$295.2m and a latest trailing-twelve-month loss of -US$305.3m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on GWPH’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for GWPH, its year of breakeven and its implied growth rate.

View our latest analysis for GW Pharmaceuticals

Consensus from the 9 Pharmaceuticals analysts is GWPH is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$28m in 2020. So, GWPH is predicted to breakeven approximately a few months from now. How fast will GWPH have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 78% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:GWPH Past and Future Earnings, March 4th 2019
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I’m not going to go through company-specific developments for GWPH given that this is a high-level summary, but, bear in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. 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. GWPH has managed its capital prudently, with debt making up 0.8% of equity. This means that GWPH 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:

There are too many aspects of GWPH to cover in one brief article, but the key fundamentals for the company can all be found in one place – GWPH’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should look at:

  1. Valuation: What is GWPH 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 GWPH 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 GW Pharmaceuticals’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 [email protected]. 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.