When Will GW Pharmaceuticals plc (NASDAQ:GWPH) Become Profitable?

GW Pharmaceuticals plc’s (NASDAQ:GWPH): GW Pharmaceuticals plc, a biopharmaceutical company, engages in discovering, developing, and commercializing cannabinoid prescription medicines using botanical extracts derived from the Cannabis plant. The company’s loss has recently broadened since it announced a -UK£131.69M loss in the full financial year, compared to the latest trailing-twelve-month loss of -UK£163.04M, moving it further away from breakeven. As path to profitability is the topic on GWPH’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for GWPH, its year of breakeven and its implied growth rate.

See our latest analysis for GW Pharmaceuticals

According to the industry analysts covering GWPH, breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of UK£68.17M in 2020. Therefore, GWPH is expected to breakeven roughly 2 years from today. What rate will GWPH have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 70.43%, which is extremely buoyant. If this rate turns out to be too aggressive, GWPH may become profitable much later than analysts predict.

NasdaqGM:GWPH Past Future Earnings Apr 24th 18
NasdaqGM:GWPH Past Future Earnings Apr 24th 18

Given this is a high-level overview, I won’t go into detail the detail of GWPH’s upcoming projects, but, keep in mind that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business 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 aspect worth mentioning. GWPH has managed its capital prudently, with debt making up 2.88% of equity. This means that GWPH 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 too many aspects of GWPH to cover in one brief article, but the key fundamentals for the company can all be found in one place – GWPH’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further research:

  1. Valuation: What is GWPH 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 GWPH 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 back ground.
  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.