Analysts Expect Breakeven For co.don AG (ETR:CNWK) Before Long

co.don AG (ETR:CNWK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. co.don AG engages in cell cultivation for the regenerative treatment of articular cartilage and spinal disc defects worldwide. The €48m market-cap company posted a loss in its most recent financial year of €13m and a latest trailing-twelve-month loss of €16m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on co.don'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.

View our latest analysis for co.don

Consensus from 2 of the German Biotechs analysts is that co.don is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of €1.0m in 2022. So, the company is predicted to breakeven just over a year from now. 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 85% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for co.don given that this is a high-level summary, but, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. co.don currently has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of co.don to cover in one brief article, but the key fundamentals for the company can all be found in one place – co.don's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

1. Valuation: What is co.don 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 co.don 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 co.don’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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