We feel now is a pretty good time to analyse Cassiopea S.p.A.'s (VTX:SKIN) business as it appears the company may be on the cusp of a considerable accomplishment. Cassiopea S.p.A., a clinical-stage specialty pharmaceutical company, focuses on developing and commercializing medical dermatology products worldwide. The CHF444m market-cap company posted a loss in its most recent financial year of €12m and a latest trailing-twelve-month loss of €11m shrinking the gap between loss and breakeven. The most pressing concern for investors is Cassiopea'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.
Cassiopea is bordering on breakeven, according to the 4 Swiss Pharmaceuticals analysts. They expect the company to post a final loss in 2021, before turning a profit of €5.0m in 2022. 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 71%, 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 Cassiopea's growth isn’t the focus of this broad overview, though, bear in mind that typically 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 0.02% 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.
This article is not intended to be a comprehensive analysis on Cassiopea, so if you are interested in understanding the company at a deeper level, take a look at Cassiopea's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
- Valuation: What is Cassiopea 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 Cassiopea 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 Cassiopea’s board and the CEO’s background.
- 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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