Corline Biomedical AB's (STO:CLBIO): Corline Biomedical AB develops, manufactures, and markets heparin based solutions to enhance kidney transplantation, cell therapies, and regenerative medicine applications. On 31 December 2019, the kr257m market-cap posted a loss of -kr9.5m for its most recent financial year. As path to profitability is the topic on CLBIO’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for CLBIO’s growth and when analysts expect the company to become profitable.
CLBIO is bordering on breakeven, according to Pharmaceuticals analysts. They expect the company to post a final loss in 2021, before turning a profit of kr223m in 2022. Therefore, CLBIO is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, I calculated the rate at which CLBIO must grow year-on-year. It turns out an average annual growth rate of 99% is expected, 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 CLBIO given that this is a high-level summary, though, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business 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 CLBIO has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which usually has a high level of debt relative to its equity. This means that CLBIO has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on CLBIO, so if you are interested in understanding the company at a deeper level, take a look at CLBIO’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:
- Valuation: What is CLBIO 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 CLBIO 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 Corline Biomedical’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.
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