Verrica Pharmaceuticals Inc. (NASDAQ:VRCA): Are Analysts Optimistic?

We feel now is a pretty good time to analyse Verrica Pharmaceuticals Inc.'s (NASDAQ:VRCA) business as it appears the company may be on the cusp of a considerable accomplishment. Verrica Pharmaceuticals Inc., a clinical-stage dermatology therapeutics company, develops medications for the treatment of skin diseases in the United States. With the latest financial year loss of US$67m and a trailing-twelve-month loss of US$87m, the US$75m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Verrica Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Verrica Pharmaceuticals

Verrica Pharmaceuticals is bordering on breakeven, according to the 6 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$2.0m in 2026. The company is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 68% 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 Verrica Pharmaceuticals given that this is a high-level summary, but, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Verrica Pharmaceuticals is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are key fundamentals of Verrica 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 Verrica Pharmaceuticals, take a look at Verrica Pharmaceuticals' company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

1. Valuation: What is Verrica 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 Verrica 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 Verrica 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.