Little Green Pharma Ltd (ASX:LGP): Is Breakeven Near?

We feel now is a pretty good time to analyse Little Green Pharma Ltd's (ASX:LGP) business as it appears the company may be on the cusp of a considerable accomplishment. Little Green Pharma Ltd engages in the cultivation, production, and distribution of medicinal cannabis products in Australia and internationally. The AU$25m market-cap company announced a latest loss of AU$8.2m on 31 March 2024 for its most recent financial year result. The most pressing concern for investors is Little Green Pharma's path to profitability – when will it breakeven? 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 Little Green Pharma

Little Green Pharma is bordering on breakeven, according to some Australian Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$100k in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 110%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Little Green Pharma's growth isn’t the focus of this broad overview, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 4.5% of equity. This means that it 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 key fundamentals of Little Green Pharma which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Little Green Pharma, take a look at Little Green Pharma's company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

1. Valuation: What is Little Green 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 Little Green 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 Little Green 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.

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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.