When Can We Expect A Profit From Cosmo Pharmaceuticals N.V. (VTX:COPN)?

With the business potentially at an important milestone, we thought we'd take a closer look at Cosmo Pharmaceuticals N.V.'s (VTX:COPN) future prospects. Cosmo Pharmaceuticals N.V., a specialty pharmaceutical company, develops, manufactures, and distributes products for gastroenterology and endoscopy worldwide. The CHF1.2b market-cap company’s loss lessened since it announced a €24m loss in the full financial year, compared to the latest trailing-twelve-month loss of €6.7m, as it approaches breakeven. The most pressing concern for investors is Cosmo Pharmaceuticals' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Cosmo Pharmaceuticals

According to some industry analysts covering Cosmo Pharmaceuticals, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of €8.1m in 2022. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 84% year-on-year, on average, which is rather optimistic! 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, we won’t go into details of Cosmo Pharmaceuticals' upcoming projects, but, take into account that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Cosmo Pharmaceuticals is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Cosmo Pharmaceuticals' case is 40%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Cosmo Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Cosmo Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

1. Valuation: What is Cosmo Pharmaceuticals 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 Cosmo Pharmaceuticals 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 Cosmo Pharmaceuticals’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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