PharmaCielo Ltd. (CVE:PCLO): Are Analysts Optimistic?

By
Simply Wall St
Published
July 25, 2021
TSXV:PCLO
Source: Shutterstock

We feel now is a pretty good time to analyse PharmaCielo Ltd.'s (CVE:PCLO) business as it appears the company may be on the cusp of a considerable accomplishment. PharmaCielo Ltd., together with its subsidiary, cultivates, processes, produces, and supplies medicinal-grade cannabis oil extracts, tetrahydrocannabinol, and related products to pharmacies, medical clinics, and cosmetic companies. The CA$227m market-cap company posted a loss in its most recent financial year of CA$44m and a latest trailing-twelve-month loss of CA$44m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on PharmaCielo's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for PharmaCielo

PharmaCielo is bordering on breakeven, according to the 2 Canadian Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of CA$47m in 2022. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 161% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
TSXV:PCLO Earnings Per Share Growth July 25th 2021

We're not going to go through company-specific developments for PharmaCielo given that this is a high-level summary, however, keep 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 we’d like to point out is that The company has managed its capital prudently, with debt making up 15% 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 PharmaCielo 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 PharmaCielo, take a look at PharmaCielo's company page on Simply Wall St. We've also put together a list of important aspects you should further research:

  1. Historical Track Record: What has PharmaCielo's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  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 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. 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.
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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.