Breakeven On The Horizon For Cosmo Pharmaceuticals N.V. (VTX:COPN)
Cosmo Pharmaceuticals N.V.'s (VTX:COPN): Cosmo Pharmaceuticals N.V., a specialty pharmaceutical company, develops, manufactures, and distributes products for gastroenterology and endoscopy worldwide. The CHF1.1b market-cap company announced a latest loss of -€24.4m on 31 December 2019 for its most recent financial year result. The most pressing concern for investors is COPN’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for COPN.
Check out our latest analysis for Cosmo Pharmaceuticals
Consensus from the 2 Pharmaceuticals analysts is COPN is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of €100k in 2021. So, COPN is predicted to breakeven approximately a couple of months from now! How fast will COPN have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, COPN may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for COPN given that this is a high-level summary, though, take into account that generally 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.
Before I wrap up, there’s one issue worth mentioning. COPN currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in COPN’s case is 40%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of COPN to cover in one brief article, but the key fundamentals for the company can all be found in one place – COPN’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further research:
Valuation: What is COPN 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 COPN is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cosmo Pharmaceuticals’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.
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.
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