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When Will Cardiol Therapeutics Inc. (TSE:CRDL) Turn A Profit?

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  • CRDL

We feel now is a pretty good time to analyse Cardiol Therapeutics Inc.'s (TSE:CRDL) business as it appears the company may be on the cusp of a considerable accomplishment. Cardiol Therapeutics Inc., a clinical-stage biotechnology company, focuses on the research and development of anti-inflammatory therapies for the treatment of cardiovascular disease (CVD). With the latest financial year loss of CA$21m and a trailing-twelve-month loss of CA$30m, the CA$162m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Cardiol Therapeutics' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Cardiol Therapeutics

According to the 3 industry analysts covering Cardiol Therapeutics, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$12m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. 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 63% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Cardiol Therapeutics given that this is a high-level summary, however, bear 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. Cardiol Therapeutics currently has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which typically has high debt relative to its equity. The company 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:

This article is not intended to be a comprehensive analysis on Cardiol Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Cardiol Therapeutics' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

  1. Valuation: What is Cardiol Therapeutics 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 Cardiol Therapeutics 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 Cardiol Therapeutics’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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.