When Can We Expect A Profit From GW Pharmaceuticals plc (NASDAQ:GWPH)?

GW Pharmaceuticals plc (NASDAQ:GWPH) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. GW Pharmaceuticals plc, a biopharmaceutical company, focuses on discovering, developing, and commercializing cannabinoid prescription medicines using botanical extracts derived from the Cannabis plant. With the latest financial year loss of US$9.0m and a trailing-twelve-month loss of US$55.5m, the US$3.3b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on GW Pharmaceuticals' 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.

See our latest analysis for GW Pharmaceuticals

According to the 14 industry analysts covering GW Pharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$125m in 2021. So, the company is predicted to breakeven just over a year 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 63%, which signals high confidence from analysts. 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 GW Pharmaceuticals' upcoming projects, though, bear in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 1.2% 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.

Next Steps:

There are key fundamentals of GW Pharmaceuticals which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at GW Pharmaceuticals, take a look at GW Pharmaceuticals' company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

1. Valuation: What is GW 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 GW 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 GW 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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