Coherus BioSciences, Inc.’s (NASDAQ:CHRS): Coherus BioSciences, Inc., a biosimilar company, develops and commercializes various therapeutic products worldwide. The US$590m market-cap posted a loss in its most recent financial year of -US$238.2m and a latest trailing-twelve-month loss of -US$195.8m shrinking the gap between loss and breakeven. As path to profitability is the topic on CHRS’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for CHRS’s growth and when analysts expect the company to become profitable.
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CHRS is bordering on breakeven, according to the 4 Biotechs analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$70m in 2021. Therefore, CHRS is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, I calculated the rate at which CHRS must grow year-on-year. It turns out an average annual growth rate of 59% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, CHRS may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for CHRS given that this is a high-level summary, though, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I would like to bring into light with CHRS is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and CHRS has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of CHRS which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at CHRS, take a look at CHRS’s company page on Simply Wall St. I’ve also put together a list of important aspects you should look at:
- Valuation: What is CHRS 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 CHRS is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Coherus BioSciences’s board and the CEO’s back ground.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.