Biome Grow Inc.'s (CNSX:BIO):
Biome Grow Inc. focuses on cannabis growing business in Atlantic
Canada region. The CA$65m market-cap company announced a latest
loss of -CA$8.9m on 31 December 2018 for its most recent financial
year result. As path to profitability is the topic on BIOâs
investors mind, Iâve decided to gauge market sentiment. Below I
will provide a high-level summary of the industry analystsâ
expectations for BIO.
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Expectation from Pharmaceuticals analysts is BIO
is on the verge of breakeven. They expect the company to post a
final loss in 2019, before turning a profit of CA$19m in 2020.
Therefore, BIO is expected to breakeven roughly a couple of months
from now! In order to meet this breakeven date, I calculated the
rate at which BIO must grow year-on-year. It turns out an average
annual growth rate of 50% is expected, which is extremely buoyant.
Should the business grow at a slower rate, it will become
profitable at a later date than expected.
Given this is a high-level overview, I wonât go
into details of BIOâs upcoming projects, but, take into account
that by and large 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 Iâd like to point out is that BIO has
no debt on its balance sheet, which is quite unusual for a
cash-burning pharma, which typically has high debt relative to its
equity. BIO currently operates purely off its shareholder funding
and has no debt obligation, reducing concerns around repayments and
making it a less risky investment.
This article is not intended to be a
comprehensive analysis on BIO, so if you are interested in
understanding the company at a deeper level, take a look at
BIOâs company page on
Simply Wall St. Iâve also compiled a list of pertinent aspects
you should further research:
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