Market Sentiment Around Loss-Making VIVO Cannabis Inc (CVE:VIVO)

VIVO Cannabis Inc's (CVE:VIVO): VIVO Cannabis Inc. manufactures and distributes medical cannabis. The CA$338.5m market-cap company’s loss lessens since it announced a -CA$29.3m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -CA$22.6m, as it approaches breakeven. Many investors are wondering the rate at which VIVO will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for VIVO’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for VIVO Cannabis

VIVO is bordering on breakeven, according to Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of CA$14.9m in 2020. Therefore, VIVO is expected to breakeven roughly a couple of months from now! How fast will VIVO 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 102% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

I’m not going to go through company-specific developments for VIVO given that this is a high-level summary, however, keep in mind 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 I’d like to point out is that VIVO has managed its capital prudently, with debt making up 24.3% of equity. This means that VIVO 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 VIVO to cover in one brief article, but the key fundamentals for the company can all be found in one place – VIVO’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further examine:

1. Historical Track Record: What has VIVO'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 VIVO Cannabis’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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.