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When Can We Expect A Profit From Correvio Pharma Corp. (TSE:CORV)?

Simply Wall St

Correvio Pharma Corp.'s (TSE:CORV): Correvio Pharma Corp., a specialty pharmaceutical company, engages in developing therapeutics worldwide. The CA$33m market-cap posted a loss in its most recent financial year of -US$16.6m and a latest trailing-twelve-month loss of -US$36.7m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on CORV’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for CORV.

See our latest analysis for Correvio Pharma

CORV is bordering on breakeven, according to the 4 Pharmaceuticals analysts. They expect the company to post a final loss in 2021, before turning a profit of US$10.0m in 2022. CORV is therefore projected to breakeven around 2 years from now. How fast will CORV have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 56% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, CORV may become profitable much later than analysts predict.

TSX:CORV Past and Future Earnings, March 9th 2020

Underlying developments driving CORV’s growth isn’t the focus of this broad overview, however, take into account that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. 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 CORV is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and CORV has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on CORV, so if you are interested in understanding the company at a deeper level, take a look at CORV’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further research:

  1. Historical Track Record: What has CORV'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 Correvio Pharma’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.

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.

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