Loss-Making Clovis Oncology Inc (NASDAQ:CLVS) Expected To Breakeven
Clovis Oncology Inc’s (NASDAQ:CLVS): Clovis Oncology, Inc., a biopharmaceutical company, focuses on acquiring, developing, and commercializing anti-cancer agents in the United States, Europe, and internationally. The US$2.93B market-cap company announced a latest loss of -US$346.40M on 31 December 2017 for its most recent financial year result. The most pressing concern for investors is CLVS’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for CLVS’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for Clovis Oncology
According to the industry analysts covering CLVS, breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$107.25M in 2020. Therefore, CLVS is expected to breakeven roughly 2 years from today. How fast will CLVS have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 63.12% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for CLVS given that this is a high-level summary, but, take into account that generally biotechs, 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.
One thing I would like to bring into light with CLVS is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in CLVS’s case is 76.82%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of CLVS 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 CLVS, take a look at CLVS’s company page on Simply Wall St. I’ve also put together a list of important factors you should further research:
Valuation: What is CLVS 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 CLVS 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 Clovis Oncology’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 pass 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.
