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Vericel Corporation's (NASDAQ:VCEL): Vericel Corporation, a commercial-stage biopharmaceutical company, researches, develops, manufactures, and distributes cellular therapies for sports medicine and severe burn care markets. The US$829m market-cap company’s loss lessens since it announced a -US$8.1m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$3.3m, as it approaches breakeven. Many investors are wondering the rate at which VCEL will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for VCEL’s growth and when analysts expect the company to become profitable.
VCEL is bordering on breakeven, according to the 5 Biotechs analysts. They expect the company to post a final loss in 2019, before turning a profit of US$17m in 2020. So, VCEL is predicted to breakeven approximately a couple of months from now! What rate will VCEL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 63%, which is extremely buoyant. 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 VCEL given that this is a high-level summary, but, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing I’d like to point out is that VCEL has managed its capital judiciously, with debt making up 0.2% of equity. This means that VCEL has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of VCEL to cover in one brief article, but the key fundamentals for the company can all be found in one place – VCEL’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further research:
- Valuation: What is VCEL 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 VCEL 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 Vericel’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.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.