Coherus BioSciences Inc’s (NASDAQ:CHRS): Coherus BioSciences, Inc., a biosimilar company, develops and commercializes various therapeutic products worldwide. The US$748m market-cap posted a loss in its most recent financial year of -US$238.2m and a latest trailing-twelve-month loss of -US$195.8m shrinking the gap between loss and breakeven. The most pressing concern for investors is CHRS’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for CHRS.
According to the 4 industry analysts covering CHRS, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$70m in 2021. CHRS is therefore projected to breakeven around 3 years from today. In order to meet this breakeven date, I calculated the rate at which CHRS must grow year-on-year. It turns out an average annual growth rate of 65% is expected, 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, I won’t go into details of CHRS’s upcoming projects, but, bear in mind that typically 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 I wrap up, there’s one issue worth mentioning. CHRS currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in CHRS’s case, it has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are too many aspects of CHRS to cover in one brief article, but the key fundamentals for the company can all be found in one place – CHRS’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should look at:
- Valuation: What is CHRS 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 CHRS 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 Coherus BioSciences’s board and the CEO’s back ground.
- 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 email@example.com.