Analysts Expect Pharmasimple SA (EPA:ALPHS) To Breakeven Soon

Pharmasimple SA (EPA:ALPHS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Pharmasimple SA operates a Website for medicines, cosmetics, and food supplements in Belgium and France. With the latest financial year loss of €2.8m and a trailing-twelve-month loss of €1.5m, the €23m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Pharmasimple's 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 Pharmasimple

According to some industry analysts covering Pharmasimple, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of €100k in 2021. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 117% is expected, which is rather optimistic! 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 Pharmasimple given that this is a high-level summary, however, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Pharmasimple is its debt-to-equity ratio of 116%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Pharmasimple 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 Pharmasimple 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 Pharmasimple’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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