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Cyclopharm Limited's (ASX:CYC) Path To Profitability

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·3 min read
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Cyclopharm Limited's (ASX:CYC): Cyclopharm Limited engages in the research and development, manufacture, and sale of medical equipment and radiopharmaceuticals in the Asia Pacific, Europe, Canada, and internationally. The AU$115m market-cap company announced a latest loss of AU$2.9m on 31 December 2019 for its most recent financial year result. As path to profitability is the topic on CYC’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for CYC, its year of breakeven and its implied growth rate.

Check out our latest analysis for Cyclopharm

According to the industry analysts covering CYC, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$1.9m in 2021. So, CYC is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which CYC must grow year-on-year. It turns out an average annual growth rate of 101% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, CYC may become profitable much later than analysts predict.

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

Underlying developments driving CYC’s growth isn’t the focus of this broad overview, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. CYC currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. CYC 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 CYC, so if you are interested in understanding the company at a deeper level, take a look at CYC’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:

  1. Valuation: What is CYC 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 CYC 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 Cyclopharm’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.

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. 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@simplywallst.com.