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CannPal Animal Therapeutics Limited (ASX:CP1): Is Breakeven Near?

Simply Wall St

CannPal Animal Therapeutics Limited's (ASX:CP1): CannPal Animal Therapeutics Limited, a pet pharmaceutical company, engages in the research and development of animal health products in Australia. The AU$11m market-cap company’s loss lessens since it announced a -AU$1.7m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -AU$1.5m, as it approaches breakeven. The most pressing concern for investors is CP1’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for CP1.

See our latest analysis for CannPal Animal Therapeutics

CP1 is bordering on breakeven, according to Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$4.0m in 2021. Therefore, CP1 is expected to breakeven roughly 2 years from now. What rate will CP1 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 103%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

ASX:CP1 Past and Future Earnings, April 23rd 2019

Underlying developments driving CP1’s growth isn’t the focus of this broad overview, but, take into account that typically 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 I’d like to point out is that CP1 has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which usually has a high level of debt relative to its equity. CP1 currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of CP1 to cover in one brief article, but the key fundamentals for the company can all be found in one place – CP1’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further research:

  1. Historical Track Record: What has CP1's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on CannPal Animal Therapeutics’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.