Vericel Corporation (NASDAQ:VCEL): Is Breakeven Near?

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Vericel Corporation’s (NASDAQ:VCEL): Vericel Corporation, a commercial-stage biopharmaceutical company, researches, develops, manufactures, and distributes cellular therapies for sports medicine and severe burn care markets. With the latest financial year loss of -US$8.1m and a trailing-twelve month of -US$3.3m, the US$841m market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is VCEL’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for VCEL.

See our latest analysis for Vericel

VCEL is bordering on breakeven, according to the 5 Biotechs analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$17m in 2020. VCEL is therefore projected to breakeven around a few months from now. How fast will VCEL have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqCM:VCEL Past and Future Earnings, July 19th 2019
NasdaqCM:VCEL Past and Future Earnings, July 19th 2019

Given this is a high-level overview, I won’t go into details of VCEL’s upcoming projects, but, keep in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. 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. VCEL has managed its capital judiciously, with debt making up 0.2% of equity. This means that VCEL 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:

This article is not intended to be a comprehensive analysis on VCEL, so if you are interested in understanding the company at a deeper level, take a look at VCEL’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further examine:

  1. Valuation: What is VCEL 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 VCEL 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 Vericel’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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.