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When Can We Expect A Profit From GW Pharmaceuticals plc (NASDAQ:GWPH)?

Simply Wall St
·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at GW Pharmaceuticals plc's (NASDAQ:GWPH) future prospects. GW Pharmaceuticals plc, a biopharmaceutical company, focuses on discovering, developing, and commercializing novel therapeutics from its proprietary cannabinoid product platform. The company’s loss has recently broadened since it announced a US$9.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$54m, moving it further away from breakeven. Many investors are wondering about the rate at which GW Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for GW Pharmaceuticals

GW Pharmaceuticals is bordering on breakeven, according to the 15 American Pharmaceuticals analysts. They expect the company to post a final loss in 2020, before turning a profit of US$66m in 2021. So, the company is predicted to breakeven just over a year from now. 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 67% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

We're not going to go through company-specific developments for GW Pharmaceuticals given that this is a high-level summary, however, bear in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 1.2% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is GW Pharmaceuticals 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 GW Pharmaceuticals 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 GW Pharmaceuticals’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. 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.