U.S. Markets closed

Loss-Making Medexus Pharmaceuticals Inc. (CVE:MDP) Expected To Breakeven

Simply Wall St

Medexus Pharmaceuticals Inc.'s (CVE:MDP): Medexus Pharmaceuticals Inc. operates as a specialty pharmaceutical company in Canada. The CA$53m market-cap company’s loss lessens since it announced a -CA$6.5m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -CA$3.7m, as it approaches breakeven. As path to profitability is the topic on MDP’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for MDP’s growth and when analysts expect the company to become profitable.

View our latest analysis for Medexus Pharmaceuticals

According to the 3 industry analysts covering MDP, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of CA$6.5m in 2022. So, MDP is predicted to breakeven approximately 2 years from today. How fast will MDP 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 92% 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.

TSXV:MDP Past and Future Earnings, January 4th 2020

Given this is a high-level overview, I won’t go into details of MDP’s upcoming projects, but, bear in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before I wrap up, there’s one issue worth mentioning. MDP currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in MDP’s case is 70%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of MDP 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 MDP, take a look at MDP’s company page on Simply Wall St. I’ve also put together a list of key aspects you should look at:

  1. Valuation: What is MDP 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 MDP 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 Medexus Pharmaceuticals’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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.